Chinese state refiners are ramping up diesel imports starting this month to help meet increased demand that has depleted 2,000 retail fuel stations in the country’s eastern and southern provinces.
China Petroleum & Chemical Corp., the nation’s biggest refiner, is seeking to import as much as 200,000 metric tons after buying 80,000 tons earlier in November, its parent said in its on-line newsletter today. The price of Asia gasoil, or diesel, has risen 12 percent more than Dubai crude so far this month on speculation Chinese demand for the fuel will increase.
China is battling a shortage of the fuel as demand from farmers increases during the autumn harvest and factories turn to their own diesel-powered generators after some local authorities shut power supplies to save energy. PetroChina Co. and China Petroleum, known as Sinopec, are boosting oil processing to records this month to ensure adequate supplies.
“Diesel shortages will ease as Sinopec and PetroChina step up production and increase imports,” Qiu Xiaofeng, an oil analyst at China Merchants Securities Ltd., said by telephone in Shanghai. “An expected drop in demand from farmers during winter will also alleviate the shortfall.”
More than 2,000 service stations closed after running out of diesel, the official Xinhua News agency said on Nov. 7. Supplies in other cities including Beijing, Shanghai, Chongqing, Dalian and Wuhan are also tight, according to Xinhua.
China’s daily diesel consumption averaged 420,000 tons in the first nine months, according to Bloomberg calculations based on government data. Monthly diesel imports averaged 126,666 tons in the January to September period. The government is scheduled to release its October oil import data on Nov. 22.
Asia’s benchmark gasoil crack spread, a measure of refining margin, climbed to $14.32 a barrel on Nov. 15, the highest since January 2009, according to data from PVM Oil Associates, a broker. The premium of gasoil to Dubai crude was at $13.47 today.
China may become a net importer of the fuel in the second quarter of 2011 as demand remains “strong” and the country adds limited refining capacity in the next two years, Goldman Sachs Group Inc. said in a report on Nov. 4. China has been a net diesel exporter since November 2008, with net shipments reaching 2.76 million tons in the first nine months.
China International United Petroleum & Chemical Co., Sinopec’s trading unit, is exporting less diesel amid the fuel shortages. November shipments may be as low as 10,000 tons, said an official with knowledge of the plan yesterday. Exports reached 90,000 tons in October and 120,000 tons in September.
Sinopec plans to increase diesel sales by 20 percent this month and boost total oil-product supplies by 15 percent to a record, the refiner said today, without giving volumes.
PetroChina plans to import 35,000 tons of diesel, Xinhua said yesterday, citing an unidentified company official. The report didn’t say when the shipments will arrive.
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