China Cuts Fuel Imports as Domestic Supply Grows

By Wang Ying and Winnie Zhu

Sept. 16 (Bloomberg) -- China, the world's second-biggest energy consumer after the U.S., cut diesel and gasoline imports in August from a record as higher domestic prices spurred oil refiners to boost fuel supplies.

Diesel imports fell to 880,000 metric tons from 970,000 tons in July and gasoline purchases declined to 382,151 tons from 606,000 tons, the Customs General Administration of China said in an e-mailed statement today. China imported 30,000 tons and 44,858 tons of diesel and gasoline a year earlier, respectively.

The government raised fuel prices by as much as 18 percent on June 20, encouraging refiners to produce more fuels and draw down inventories. China's fuel shortage has receded, Zhang Guobao, who heads the National Energy Administration, the top energy regulator, said last month.

China, traditionally a supplier of gasoline to Asian countries, was a net importer of the fuel in August, with exports at 150,000 tons. Shipments of diesel, mainly used to fuel trucks and power generators, were at 20,000 tons.

With improved domestic supplies, China International United Petroleum & Chemical Corp., the country's biggest oil trader, would halt diesel purchases in August and September, a trader said on Aug. 7. China National United Oil Corp. would have reduced August imports by a ``big margin'' from July after boosting purchases for two months, a second trader said.

The country had suffered a fuel shortage since July last year after domestic refineries curtailed output to avoid losses caused by government-controlled fuel prices and soaring crude- oil import costs.

China, the largest consumer of diesel in Asia, had also increased fuel imports after a deadly earthquake struck the southwestern province of Sichuan in May and before the Beijing Olympics last month.

The tight diesel market has eased substantially and gasoline supplies in particular are relatively adequate now, the energy regulator's Zhang said on Aug. 18. China may halt diesel imports by February because its refineries are increasing production, Goldman Sachs Group Inc. analysts said.

================================================================
                               Aug      Jan.-Aug    Jan.-Aug
================================================================
                     - Imports (Million Metric Tons) -   -YoY%-
Crude oil                      15.65     119.98            8.7
Oil products                    3.34      28.72           18.3
Gasoline                        0.382      1.83         2461.3
Kerosene                        0.61       4.28           32.7
Diesel                          0.88       5.71         1473.2
Other fuel oil                  1.21      15.1           -19.1
Coal                            3.79      28.68          -18
                     - Exports (Million Metric Tons) -   -YoY%-
Crude oil                       0.40       2.22          -23.7
Oil products                    1.4       10.93            6.3
Gasoline                        0.15       1.09          -71.7
Kerosene                        0.41       3.51           18.9
Diesel                          0.02       0.27          -44.3
Other fuel oil                  0.76       4.65          134.3
Coal                            3.37      33.64            0.3
================================================================

Note: Figures are preliminary and may be revised in the final

Customs report at the end of the month.

To contact the reporter on this story: Winnie Zhu in Shanghai at wzhu4@bloomberg.net; Wang Ying in Beijing at wang30@bloomberg.net.