SINGAPORE (ICIS)--Gasoil export margins for south China-based refiners fell into negative territory again in November because of higher sales incomes in the domestic market than those in the Singapore market.
Theoretical margins for gasoil exports dropped to minus yuan (CNY) 62.3/tonne on average in November, compared with CNY216.1/tonne in October, according to ICIS data.
In November, the domestic gasoil sales revenue decreased by 7.8% month on month to CNY4,158.9/tonne.
The domestic gasoil market entered the traditional peak consumption season in November. However, there were significantly bearish factors in the overseas market.
In addition, the retail ceiling prices of gasoline and gasoil in China were adjusted down three times in a row and kept breaking the record of largest decrease in recent years.
As a result, deals were negotiated on a hand-to-mouth basis and prices decreased amid a pessimistic outlook.
Meanwhile, the average income of exporting gasoil to Singapore shrank significantly by 13.3% over the same period to CNY4,096.5/tonne in November, with gasoil prices in Singapore fluctuating in line with crude values during the month.
Looking ahead, market participants are waiting for the potential output cut agreed at the Organization of Petroleum Exporting Countries (OPEC) meeting, which will determine the price trend in the overseas market.
Domestic prices are expected to fluctuate slightly at low levels because restriction on outdoor construction activities in the winter season as well as operation limits in the industrial sector in north China will weaken the demand for gasoil.
Therefore, the export margins may hover around the break-even point in December.
ICIS assesses China’s gasoil export margins by comparing export revenue of zero-pour-point non-vehicle-use gasoil with sulphur content at 500ppm with domestic sales income at south China-based refiners.