Multiple factors lead to sharp reduction of oil product export quota

In recent years, the increasing export of refined oil has been regarded as a “routine” matter by the market. Under the background of oversupply, the sharp reduction of export quota of refined oil has caused a high degree of market tension. From the perspective of the combination of market and policy, the sharp reduction of export quota is the result of resonance of many factors1. The decrease of export profit greatly suppresses the export enthusiasm of enterprises. Affected by public health emergencies, the demand for oil products in foreign markets is significantly lower than expected, and the price of refined oil products continues to be low. Compared with the background of high domestic gasoline and diesel prices, the export enthusiasm of enterprises is general.

2. Under the background of the policy of imposing consumption tax on some import links and the severe “crackdown on illegal activities” in various parts of the country, such as the phased supply or obstruction of refined oil in the southern market, which is flooded with blended oil, the transfer of export to domestic sales also plays a role of “supply guarantee” to a certain extent.

3. More and more countries have reached a consensus on clean energy, low-carbon and environmental protection, and have launched a series of stimulus plans and favorable policies. From this point of view, for a long time, the problem of “quality surplus” faced by refined oil export is not in line with the current theme of low-carbon environmental protection（ China’s exports are mainly in Southeast Asia, and some Southeast Asian markets are still in the second and third national standards.)4. Facing the background of 73.5% dependence of domestic crude oil import on foreign countries, the export volume of refined oil continues to increase, “large import and large export” is not conducive to the current energy security structure.

5. The pressure of export competition is increasing. In 2020, the refining capacity of the Asia Pacific region will be about 1.822 billion tons / year, of which India’s expansion and Malaysia’s new units will increase by 4.3 million tons / year and 1 million tons / year respectively. In the future, Indonesia, Pakistan, the Philippines, Japan, etc. all have planned production projects, and the competition in the Asia Pacific market will become more and more obvious.

6. RMB appreciation is not conducive to the export of domestic goods.