China's fuel inventories hit over decade lows, raising concerns over comeback of export curbs

By Sam Li and Lewis Jackson

BEIJING, Sept 24 (Reuters) - China's gasoline and diesel inventories have fallen to their lowest levels in more than a decade as exports surge and domestic demand recovers seasonally, according to GL Consulting.

Low stock levels appear to have raised Beijing's concerns, increasing the prospect of tighter export controls in October, according to Rystad Energy. GL Consulting said it expects exports to fall in October as state refiners prioritise domestic energy security.

Commercial gasoline inventories have hit their lowest level since 2011, while diesel inventories have fallen to their lowest since 2015, according to data provided by GL Consulting, a consultancy owned by Mysteel, a leading commodity information provider.

China does not publicly disclose fuel inventory data, while GL Consulting's records date back to 2011.

The world's biggest crude oil importer has cut refinery throughput by 7% this year, as supply disruptions forced refiners to cut runs and Beijing imposed fuel export restrictions in mid-March.

However, China began easing the restrictions in mid-July, with exports rebounding to prewar levels in August, and they are expected to maintain their strong momentum in September. The recovery has brought windfall profits for refiners and supported higher refinery runs.

China has yet to issue its October fuel export plan to refiners.

Some analysts have also lowered their estimates for China's fourth-quarter crude imports as Middle East supply disruptions intensify, and expect current refinery run rates to be unsustainable.

Energy Aspects has lowered its forecast for China's fourth-quarter crude imports to 9.2 million barrels per. Rystad Energy has lowered its fourth-quarter refinery throughput forecast by 880,000 bpd from its previous estimate, to 13.9 million bpd.

"High crude costs are now forcing independent refiners to trim run rates. With state-owned refiners also entering their maintenance season, they cannot fully offset the production shortfall," said Ye Lin, vice president at Rystad Energy.

"The upshot is a sector with little room to manoeuvre. Tighter export restrictions would also mean forgoing attractive export margins, but China must safeguard domestic supply."