China’s refined products exports to Nigeria may affect Dangote refinery sales if…
Emerged signals that China will increase its petrol exports in July and August with products cargoes heading to Nigeria and Mexico, may pose sales challenges to Dangote Refinery target markets if the glut and conditions stretches till when Dangore refinery will come on stream.
Business Hilights gathered that the jump in refining output was due to wave of new production and slowing domestic demand of products in China.
Another fact why international refiners may soon begin to saturate supplies in developing economies like Nigeria is the growing adoption of electric cars and renewable energies across the world due to observed shift from fossil fuel usage to renewables.
According to Reuters, the surge in Chinese shipments will fill a supply gap caused by refinery outages in the United States and the Middle East but are likely to accelerate a plunge in Asian petrol margins, which have dropped by 50 per cent since July 12, when they clawed back to a three-month high.
Already, China’s refineries, led by PetroChina Co, will export about 1.5 million tonnes of petrol a month in July and August, two senior traders with knowledge of China’s petrol exports were quoted as saying. That is up from June exports of one million tonnes and near the record of 1.69 million tonnes exported in March, according to Chinese customs data.
The export surge is a result of the start-up of two large-scale refineries owned by Hengli Petrochemical and Zhejiang Petrochemical that will each add about four million tonnes per year of new petrol output when fully operational.
Recall that PetroChina was granted petrol export quotas of 4.7 million tonnes in the second batch of quotas issued in May, more than half of the quotas given. As a result, the company is placing cargoes to Mexico, Chile and Nigeria, according to traders.
Michal Meidan, director of the China energy programme at Oxford Institute of Energy Studies, said “Petrol surplus in China is exacerbated by slowing demand growth, given weakening consumer confidence as the trade war continues, reflected also in slumping car sales.”
Chinese refiners have loaded 1.2 million tonnes of petrol for export as of July 23, after a record 1.6 million tonnes in June, according to data from Refinitiv.
