State-run oil company Sinopec is selling diesel as far afield as South Africa as China's refiners seek homes for their surplus fuel in the latest sign of troubles in the domestic refining business.
Sinopec said on Monday it shipped its first 30 000 t of diesel from its Shanghai refinery heading for South Africa.
This cargo and another September shipment marked the first batch to South Africa in two years, according to Thomson Reuters Eikon shipping data. Such shipments have also been extremely rare in the past five years, according to the data.
"China's four oil majors are facing a glut overhang in domestic market and the companies are fully aware of the headwinds ahead," a product trader from a state-owned oil company said.
"Chinese companies are looking to expand sales to emerging market countries beyond South East Asia where margins have weakened amid competition," he said referring to India and South American countries.
He declined to be named to due company policy.
Sinopec's rival CNPC also sold its first ever gasoline to Americas in April.
China exported record volumes of diesel in May, with the total almost hitting 2.4-million tonnes. Shipments have remained firm since, as domestic fuel demand growth stagnates.
Vehicle sales, a barometer of gasoline demand, were down 4 percent in July. An environmental crackdown has also hurt diesel sales from trucks in the past two years.
"Refinery runs were growing fast but domestic consumption did not catch up. With two more new refineries expected to start soon, the glut is only going to get worse," Liu Mengkai, fuel products analysts with consultancy Sublime China said.
"Chinese refiners are vying for a bigger share of fuel market in countries like Australia where consumption is still good," Liu said.
Eikon trade data showed that China's total fuel exports to Australia hit 11 cargoes or 344 800 t in July, a record high.
In Africa, Sinopec is seeking to buy Chevron's assets in South Africa and Botswana, giving Asia's top refiner its first major African refinery as well as petrol stations and convenience stores.
China's refinery runs rose in June as state-controlled oil majors boosted output of fuel products, data showed.