China sells diesel to South Africa as refiners seek new export markets

20th August 2018

By: Reuters

  

Font size: - +

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.

Edited by Reuters

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION