能源研讨会 - 中国成品油出口专家电话会议要点-Energy Symposium Week_ Takeaways from call with experts (JLC) on Chinese oil product exports

Summary of Key Points from the Conference Call on Chinese Oil Product Exports Industry Overview - The conference call focused on the outlook of the China refining market and trends in Chinese oil product exports, hosted by JLC as part of the Energy Symposium Week [1][2]. Core Insights - Export Quota Stability: JLC expects China's refined product export quota to remain broadly flat in 2026, with limited growth projected through 2030. The first batch of 2026 export quotas was released in late December and showed no year-over-year change [3][7]. - January Export Decline: Preliminary data indicated that Chinese oil product exports fell by 8% year-over-year in January [3][13]. - Future Quota Estimates: For 2026/27, JLC estimates the refined oil product export quota could reach approximately 41-42 million tons, reflecting a modest increase of about 1-2% year-over-year, primarily due to the commissioning of HAPCO expected by mid-to-late 2026 [3][9]. - Regulatory Constraints: Despite an anticipated surplus in the domestic market, JLC believes that Chinese regulators are unlikely to ease export controls due to concerns over carbon emissions and energy security [3]. Domestic Demand and Supply Dynamics - Peak Demand: JLC forecasts that the demand for major oil products in China peaked in 2024, with gasoline and diesel demand declining by 3% and 2% year-over-year in 2025, respectively. Jet fuel demand also saw a 2% decline, attributed to reduced travel activity linked to the lunar new year timing [11]. - Refining Capacity Growth: China's total refining capacity is expected to rise towards 20 million barrels per day (mb/d) by 2030, driven by new capacity additions from HAPCO and Sinopec [12][20]. - Refinery Run Estimates: For 2026, a slight year-over-year increase of 1.4% in refinery runs is anticipated, with independent refiners expected to see a 5.5% increase, while state-owned enterprises (SOEs) may experience a 0.6% decrease [12]. Investment Recommendations - Reliance Industries (Buy): The stock is viewed favorably due to strong earnings growth across segments and attractive valuation. Refining fundamentals are supported by tight product markets through CY27, with potential upside risks from a revival in crude sourcing from Venezuela [24]. - S-Oil (Buy): S-Oil is recommended due to positive refining margins, favorable feedstock economics, nearing capex completion, and attractive valuation. The target price remains at W120,000 based on a 6.5x 2028E EV/EBITDA multiple [25][26]. Risks and Considerations - Downside Risks for Reliance: Key risks include lower-than-expected refining and chemical margins, project delays, and higher future capital expenditures [24]. - Downside Risks for S-Oil: Risks include weaker-than-expected refining margins, delays in the Shaheen project, and currency fluctuations [26]. Additional Insights - The second batch of 2026 export quotas is expected to be released in June, which may provide further clarity on export trends [3].