(China Daily)
Updated: 2008-02-05 09:15

China takes a break in February from three months of hefty diesel imports due to higher domestic output and ample stocks, while gasoline exports fall as it faces the worst winter in 100 years.

State refiners slashed diesel, or gas oil, imports to 100,000 tons as refineries operated at near-record levels. This was a drop from record diesel purchases from November to January at around 140,000 barrels per day (bpd) - ranging from 200,000 tons to 800,000 tons a month.

The top dozen refineries that account for more than a third of the country's capacity, ramped up production to near-peak levels this month by 2.8 percent from January to 2.53 million bpd, a touch below the record high of 2.56 million bpd last June.

The world's second biggest energy consumer cut gasoline exports following calls by Beijing to ensure fuel supply to meet peak demand during the lunar new year festivities that kick off mid-week.

"Refineries have tweaked their runs to maximize gas oil output. There isn't much gasoline supply for export," said a PetroChina official, who declined to be named.

Both PetroChina and Sinopec Corp skipped gasoline exports, as the country faces a freak winter that could last past the lunar new year.

Only export-oriented West Pacific Petrochemical Corp (WEPEC) is exporting 100,000 tons of gasoline, compared with 222,000 tons shipped out by the Chinese refiners in November.

Icy roads crippled logistical and bus transport as well as closures of some highways, dampening diesel usage. Construction works were also brought to a halt.

Diesel consumption is also expected to come to a lull as factories shut down for the festive period.

"Demand for diesel is weak," said a refinery source on condition of anonymity.

Asian gas oil crack spreads weakened to below $18 a barrel from more than $21 in late December as Chinese imports ebbed. On the other hand, lower gasoline exports helped buoy prices in the Singapore oil hub amid stronger demand from Indonesia, Vietnam and Australia.

Chinese wholesale diesel prices fell to below 6,000 yuan ($833) a ton due to abundant imports, down from more than 7,000 yuan a ton in December. Wholesale gasoline prices steadied at around 6,400 yuan a ton.

"Diesel prices are falling. We expect them to go lower after the Chinese New Year," added the refinery source.

Gasoline demand is backed by expanding car ownership. Car sales grew 12.49 percent to 635,400 in December from a year earlier, said the China Association of Automobile Manufacturers.

Agencies