SINGAPORE : Zhejiang Petroleum and Chemical Co (ZPC), China’s largest private refiner, is ramping up diesel output and reducing petrochemical production this month to cash in on higher export margins for the industrial fuel, five trade sources said.
ZPC is among the refiners allocated export quotas for refined products as Beijing sought to increase economic activities in its refining sector.
The refiner will increase diesel output by around 200,000 tonnes (1.5 million barrels) for November from its 800,000 barrels-per-day Zhoushan refinery, two of the sources said on Thursday.
ZPC is cutting production of aromatics such as benzene and paraxylene, which have negative margins, to free up raw material for more profitable fuel production, they said.
The sources declined to be named as they are not authorised to speak to media.
The company could not be immediately reached for comment.
While a ramp-up in China’s diesel exports has cooled the region’s refining margins slightly in recent weeks, Asia’s 10-ppm sulphur gasoil margins were still 192 per cent higher than a year ago.
It is unclear if the production switch will be extended to December.
Last week, ZPC sold a 35,000-tonne 10-ppm sulphur gasoil cargo for end-November loading at a premium of $2 a barrel over Singapore quotes, according to another two northeast Asia-based trading sources.