China’s thirst for high-octane gasoline is a bright spot for European refiners and offers a taste of global oil demand growth next year.
While US gasoline demand traditionally eases after the peak summer driving season, Chinese buying of blending components used to upgrade gasoline to high-quality Euro V standard has remained strong, helping to power a recovery in cracks despite widespread expectations of a crash.
According to shipping data and traders, tankers carrying around 1.4 million tonnes of mixed aromatics including reformate and toluene have been booked to load from the middle of September to early November out of Europe to China.
The flow is stronger than the first seven months of the year, when a total of around 3.5 million to 4 million tonnes of mixed aromatics were booked. More volumes are heading to China from the United States as well.
According to the data, Gunvor booked nearly 500,000 tonnes on some nine 42,000- tonne and 90,000-tonne tankers between late September and the end of October. Shell booked around 250,000 tonnes.
Though, the exact reason for the strong pull from China at a moment when demand typically ebbs was unclear, traders said it could relate to importers stocking up before tax regime changes at the end of the year.
Chinese demand – in particular for summer grades that require high-quality blending components – is mirrored in India and the United States.
Mr Robert Campbell, head of oil products research at Energy Aspects, said that “Octane is the story, and it’s going to be tight. In Asia, this is an acute problem because the refineries are set up to make diesel.”
The sustained gasoline buying contrasts with diesel, where a sharp rise in stocks in the last few months has pummeled margins and forced refineries in Asia to cut operating rates.
Mr Campbell said that “They have a lot of problems meeting demand and staying in balance given the very slow pace of diesel demand growth in China. Importing blendstocks allows them to make more gasoline while holding back diesel output.”
Source : REUTERS
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