The recent ICIS data showed that, for the first quarter of this year, the amount of diesel exports achieved a record high with the cumulative export diesel reaching 105 million tons, a year-on-year growth of 368%; Over the same period, the China exported a total of 115 million tons of gasoline, a year-on-year growth of 14%.
As of April 30, domestic diesel sales price was 7,800 yuan / ton, Singapore diesel arrival price (excluding freight) price was 7490 yuan / ton, the export profit from the theoretical calculation was -40 yuan / ton in comparison with the domestic sales profit which wad 270 yuan / ton. However, some believed that perhaps the greatest goal of oil giants to approach the export of gasoline and diesel was not about earning money direct from export but to tighten the domestic supply, and thus ensure the maintenance of domestic market prices.
The increase in exports and slowdown in domestic demand are closely related. An ICIS report noted that domestic macroeconomic slowdown had seriously hampered the growth in demand for diesel; economic indicators such as domestic infrastructure, export, traffic volume continued last year’s downward trend, the growth rate had significantly lowered the demand for diesel.
In addition to reduced demand from the economic activities, analyst Chen Qing suggested that surge of exports had been contributed by the new pricing mechanism which resulted in brokers’ reduction in purchase. Chen Qing said that after the implementation of the new pricing mechanism for refined oil, there has been a shorten period for the price adjustment, large brokers had reduced the purchase resulting shifting of the domestic market from the previous seller’s market to a buyer’s market, in order to balance the domestic oil market, oil giants have to increase exports.