China’s gasoline exports are expected to have rebounded in November after refiners dashed to secure higher profits before changes to export tax rebates took effect this month, analysts and traders said.

The increase could reduce China’s high products inventories and provide brief support to Chinese refiners that have faced thin margins as demand at the world’s No. 2 consumer of the product barely grew this year.

China’s exports of gasoline, diesel and jet fuel are estimated to rise to 2.74 million metric tons in November, with Singapore the biggest destination for the first two fuels, according to shiptracking firm Vortexa.

In October, exports of transportation fuels, including marine fuel, fell to an 18-month low of 3.96 million tons, customs data showed, as weak export margins reduced shipments.

Gasoline exports in November were estimated at 1.1 million tons (9.295 million barrels) by Vortexa, while Kpler’s estimate was 1.18 million tons. LSEG’s estimate is 850,000 tons, the highest in five months.

This is higher than the 670,000 tons reported by Chinese customs for October gasoline exports, which was the lowest since April.

Beijing announced in mid-November that it will reduce the export tax rebate rate for a range of goods, including some refined oil products, from 13% to 9%. Exporters’ margins had been expected to fall by 200-300 yuan ($27.51-$41.27) per ton, a state oil official said.

“Chinese refiners opted to export gasoline before the Dec. 1 cut-off,” Kpler analyst Zameer Yusof said.

About 200,000 tons of the gasoline were fixed without clear destinations or buyers, he added.

“Even if they are distressed and float in the backwardated market, the losses will still be lower than the estimated $3/bbl loss they would’ve incurred by exporting them in December instead,” Yusof said. Prompt prices are higher than those in future months in a backwardation market.

LSEG analyst Su Ling Teo said gasoline exports are expected to decline again after the December tax change.

Another LSEG analyst Charles Ong also expected poor margins to subdue diesel exports in “the near future”.

For November, Vortexa expected a rebound in diesel exports to 704,000 tons, while the estimates from Kpler and LSEG are 360,000 tons and 220,000 tons, respectively.

In October, diesel exports were 480,000 tons, down 57.2% from a year earlier, customs data showed.

For jet fuel, Kpler estimated that about 1.04 million tons were exported in November. That is close to Vortexa’s estimate of 935,400 tons, but down from the 1.45 million tons in October reported by China customs.
Source: Reuters (Reporting by Florence Tan, Chen Aizhu and Haridas; editing by Barbara Lewis)