The volume of China’s gasoline exports caught up with diesel last month as refiners dumped excess output in overseas markets to alleviate swelling stockpiles at home amid record domestic production.

The world’s largest energy consumer more than doubled shipments in June compared with a year earlier to a record 1.1 million metric tons, or about 312,000 barrels a day, data from the General Administration of Customs in Beijing showed on Thursday. Exports of the motor fuel increased 75 percent to 4.45 million tons between January and June. Diesel volumes slowed to 1.1 million tons, the lowest level in four months even as overseas sales in the first half of the year more than tripled to 6.6 million tons.

The flood of shipments from China is exacerbating a glut of fuel across Asia, where processors are cutting operating rates as they grapple with a slump in refining margins. The profit from turning benchmark Dubai crude into oil products in the region has averaged less than $6 a barrel in the first six months of 2016, compared with $8.25 in the same period last year, data compiled by Bloomberg show.

“Gasoline supply growth is outstripping consumption growth in China, while exports are also growing in the likes of South Korea and Japan,” Peter Lee, an analyst with BMI Research, said in an e-mail. “There’s not only an apparent oversupply of gasoline in China, but also across the whole region as well.”

Record Processing

The country processed a record 11 million barrels a day of oil in June, boosting gasoline output by 8.7 percent to the highest monthly level ever. The nation’s refiners have been adjusting their facilities to maximize gasoline production at the expense of diesel to take advantage of robust vehicle growth in the world’s largest auto market. Commercial gasoline inventories increased to a record 7.83 million tons at the end of May, according to data released by Xinhua’s Oil, Gas & Petrochemicals newsletter.

China started to flood regional markets with diesel from the middle of last year as stockpiles swelled amid slowing industrial activity at home. Gasoline may become the “next diesel” if demand doesn’t pick up significantly, Lee said in May. China’s apparent gasoline demand climbed 2.5 percent from a year earlier in June, according to data compiled by Bloomberg. Consumption was forecast by China National Petroleum Corp.’s annual research report to grow 7.4 percent this year.

The nation’s net diesel exports may fall further in the third quarter as domestic demand will likely pick up amid summer travel and as agricultural harvesting starts, according to Lin Jiaxin, an analyst with ICIS China.

Imports of natural gas by pipeline rose 24 percent to 15.3 million tons in the first six months and inbound liquefied natural gas shipments gained 21 percent from the same period last year to 11.5 million tons.

Source: Bloomberg