According to WPB, China’s decision to temporarily authorize about 2.7 million metric tons of refined-fuel exports in August introduces a new variable into Asia’s bitumen market. The approval applies to gasoline, diesel and jet fuel shipped to destinations outside Hong Kong and Macau. It does not directly authorize additional bitumen exports, but it may change refinery operating rates, product priorities and the volume of heavy residue available for paving-grade production.
Including deliveries to Hong Kong and bonded jet-fuel sales for international aviation, China’s total August export program for gasoline, diesel and jet fuel is estimated at approximately 3.6 million to 3.7 million metric tons. That would exceed the monthly average of 3.04 million tons recorded in 2025 and would also be higher than the approximately 2.5 million tons planned for July. The government has allowed some August volumes to be carried into September because the time available to organize spot cargoes is limited.
The temporary approval represents a significant change from the restrictions imposed between March and June. During that period, China sharply reduced fuel exports to protect domestic supply after the Middle East conflict disrupted crude shipments and reduced the availability of feedstock. Export controls began to ease in July, and the August allocation extends that process for a second month.
Of the 2.7 million tons currently approved, state-owned refiners received approximately 2.2 million tons. Zhejiang Petrochemical was allocated the remaining 500,000 tons after resuming overseas fuel sales in July following a suspension of more than three months. Refiners must demonstrate that they hold sufficient inventories for the domestic market and meet specified production requirements before receiving permission to export.
This inventory requirement is important. Beijing is not simply encouraging refiners to empty domestic fuel tanks into the international market. The policy links export permission to domestic supply security and production performance. In practice, refiners may need to increase crude processing, rebuild inventories and satisfy local demand before using the full export allowance.
Chinese refinery throughput in August is expected to rise by approximately 200,000 to 300,000 barrels per day from an estimated July level of nearly 13 million barrels per day. If that forecast is realized, total runs could move toward roughly 13.2 million to 13.3 million barrels per day. The increase would be meaningful, but it would still follow a period of unusually weak processing. Official data showed crude processing in June at 51.24 million metric tons, down 17.7% from a year earlier.
The immediate impact on the bitumen market is not straightforward. Higher crude runs normally create larger volumes of atmospheric residue and vacuum residue, the heavy refinery streams from which bitumen can be produced. In a refinery using suitable crude and the appropriate configuration, additional throughput can therefore increase the potential feedstock available for road-paving material.
However, potential feedstock is not the same as actual bitumen production. Refineries optimize output according to product margins, equipment configuration, crude quality, storage capacity and contractual obligations. Vacuum residue can be sold or processed as bitumen, blended into fuel oil or directed into cokers and other residue-conversion units that produce lighter, higher-value products.
The August policy specifically rewards the production and export of gasoline, diesel and jet fuel. It does not require refiners to manufacture more bitumen. If export margins for transportation fuels remain stronger than returns from the domestic paving market, refiners may increase crude runs while directing a larger share of their intermediate streams toward fuel production.
Earlier export economics already supported this choice. Gasoline export margins were estimated at approximately 1,000 yuan per metric ton, while diesel export margins were around 900 to 1,000 yuan per ton during the period when the government was preparing to relax July restrictions. Higher Chinese fuel exports were also expected to add to supplies from other Northeast Asian refiners and place downward pressure on regional diesel and jet-fuel prices.
This creates a two-stage risk for bitumen. During the first stage, strong fuel-export economics may raise refinery utilization but reduce the proportion of suitable residue retained for paving-grade production. In the second stage, if larger Chinese exports weaken regional gasoline, diesel and jet-fuel margins, the relative economics of bitumen and other heavy products may improve. The final effect will depend on how quickly the additional fuel volumes enter the market and how regional product prices respond.
Refinery complexity will also determine the outcome. A refinery with extensive coking, hydrocracking or residue-conversion capacity has more options for converting heavy material into lighter fuels. A less complex refinery may have fewer profitable alternatives and could direct more residue toward bitumen or fuel-oil production. The same increase in crude throughput can therefore increase bitumen output at one facility while reducing its share of total production at another.
Crude selection is equally important. Bitumen is produced from carefully selected crude oils or crude blends, and not every crude provides residue with the required characteristics for commercial road grades. Higher runs based on lighter crude may produce more gasoline and middle distillates without delivering a proportional increase in suitable bitumen feedstock. Supply uncertainty around Middle Eastern crude remains a constraint because China’s seaborne imports have not fully returned to their pre-conflict level.
China’s seaborne crude imports reached approximately 6.94 million barrels per day in July, recovering from a decade-low level of 5.99 million barrels per day in June. However, July arrivals were still about 39% below the average recorded in the three months before the conflict. China has been able to support refinery operations partly by drawing from substantial inventories, but continued crude uncertainty may prevent refiners from using the entire August export allowance.
The distinction between an export allowance and a completed export is therefore essential. The government has authorized 2.7 million tons, but actual shipments may be lower because refiners must arrange cargoes within a short scheduling period, obtain crude, maintain domestic stocks, secure vessels and find buyers. Volumes carried into September would also reduce the amount physically shipped during August.
For the Chinese bitumen market, higher refinery runs could improve domestic availability if refiners produce additional vacuum residue and road demand is not strong enough to absorb it immediately. Coastal terminals could receive larger volumes, and domestic buyers might face less competition for prompt supply. This outcome could also reduce China’s need for imported bitumen or heavy blending materials.
The opposite result remains possible. If refiners prioritize gasoline, diesel and aviation fuel, bitumen supply could remain restricted even as total refinery output rises. Domestic bitumen prices might then fail to reflect the increase in crude processing. Buyers could see more fuel leaving Chinese ports without a corresponding improvement in paving-grade availability.
The policy may have an immediate effect on Singapore because Singapore serves as a pricing, trading, storage and blending center for Asian petroleum products. Additional Chinese gasoline, diesel and jet fuel could compete with regional cargoes and weaken prompt product premiums. Changes in fuel-oil and middle-distillate economics can also influence how refiners value heavy residue and whether they retain it for bitumen, conversion or marine-fuel blending.
For Singapore-based bitumen traders, the most important question will be whether higher Chinese runs create physical paving-grade supply or merely increase exports of lighter fuels. If additional Chinese bitumen becomes available, it could compete with cargoes from South Korea, Malaysia and other regional suppliers. If bitumen output remains unchanged, the main effect may appear indirectly through weaker fuel cracks and altered refinery economics.
South Korean refiners will face greater competition in the gasoline, diesel and jet-fuel markets. South Korea operates a highly export-oriented refining system, and an increase in Chinese cargoes can reduce the margins available to other Northeast Asian suppliers. If product margins fall enough to reduce Korean refinery runs, bitumen export availability could tighten. If refiners maintain throughput but divert fewer residues toward conversion, additional bitumen could instead reach the market.
The effect on South Korea is therefore also two-sided. Higher Chinese fuel exports can weaken Korean refining profitability, but lower fuel margins may change the relative value of bitumen production. Buyers should monitor refinery utilization, maintenance schedules and actual bitumen-loading programs rather than assuming that increased Chinese competition will produce a single regional result.
Southeast Asian markets may receive the most direct benefit from larger Chinese transportation-fuel exports. Import-dependent countries can obtain additional gasoline, diesel and jet-fuel cargoes at a time when regional supply remains affected by disruptions in the Middle East and lower-than-normal flows through the Strait of Hormuz. Asia’s July imports of light and middle distillates remained 18.5% below the average recorded before the conflict, despite a partial recovery from June.
For bitumen buyers in Vietnam, Indonesia, Thailand, Malaysia, the Philippines and nearby markets, the benefit will depend on the product decisions made inside Chinese refineries. An increase in Chinese bitumen availability could add a nearby source of supply and reduce reliance on longer-haul cargoes. A fuel-focused production strategy, however, may provide little relief to asphalt markets even while transportation-fuel availability improves.
Marine logistics will also influence the outcome. Gasoline, diesel and jet fuel can move in a broad clean-product tanker fleet. Bulk bitumen depends on a smaller number of heated and insulated vessels. An increase in Chinese bitumen production would not automatically become regional supply unless specialized vessels, terminal capacity and suitable loading schedules are available.
Packaged material may offer greater flexibility, but drum, jumbo-bag and container shipments involve packaging costs, container availability, port handling and longer delivery schedules. Higher refinery output can increase the volume offered at the plant gate without immediately reducing the delivered price in distant Southeast Asian markets.
The August export decision may also affect refinery planning beyond a single month. Allowing unused volumes to move into September gives refiners more time to align production, sales and shipping. If the additional exports are profitable and domestic inventories remain sufficient, companies may argue for continued flexibility. If exports reduce local supply or crude availability deteriorates, restrictions could be tightened again.
China’s policy has already changed several times in response to external supply conditions. Exports were reduced to protect domestic availability, partially restored in July and expanded again for August. The market should therefore treat the current approval as a temporary operating decision rather than a permanent return to unrestricted fuel exports.
The key indicators for bitumen will be actual refinery throughput, crude availability, vacuum-residue values, fuel export margins, domestic road demand and confirmed bitumen production. Export permissions for gasoline, diesel and jet fuel are important, but they cannot by themselves determine the paving-grade balance.
A rise of 200,000 to 300,000 barrels per day in Chinese refinery runs creates the physical possibility of additional heavy residue. Whether that residue becomes bitumen will depend on refinery configuration and relative profitability. Strong transportation-fuel margins could reduce bitumen’s share of the barrel, while weaker regional fuel prices later in the cycle could eventually improve the incentive to produce more paving material.
China has reopened the refined-fuel export tap, but it has not directly reopened a bitumen export tap. For Asian asphalt markets, the decision is neither clearly bullish nor clearly bearish. It increases the amount of crude expected to pass through Chinese refineries, but it also strengthens the commercial reason to prioritize gasoline, diesel and jet fuel.
The most likely near-term result is greater uncertainty in the relationship between refinery throughput and bitumen availability. China may process more crude and export more fuel without immediately increasing paving-grade supply. A clearer direction will emerge only when actual August production, export and refinery-allocation data become available.
By WPB
News, Bitumen, China, Fuel Exports, Refinery Runs, Vacuum Residue, Singapore, South Korea, Southeast Asia, Asphalt Market
