China becomes net exporter of diesel oil in Oct

Shanghai, November 20 (Gasgoo.com) China imported 80,000 tons and exported 110,000 tons of diesel oil in October 2008, becoming a net exporter of diesel in October for the first time since August 2007, data from the General Administration of Customs showed on Monday. Though the oil supply has surpassed demand, retailing prices are still hard to drop.

The 46.4% slide in diesel imports from a year ago, while a stark contrast to the 266.5% annual growth in September to 338,838 tons, was above expectations of regional traders who forecast no diesel imports at all for the month. While more than anticipated, analysts said the softening diesel import demand would hit refiners as far off as Europe that supply China's previously hearty thirst for the fuel.

Customs statistics show that the imports of refined oil products kept plunging since August. China, formerly top gasoline supplier in Asia, imported 31,500 tons of gasoline in October, but exported 210,000 tons, leaving a net export of 178,000 tons, more than double of 78,000 tons in September. Exports of both gasoline and diesel in the first 10 months of the year were still 65% and 33% lower, respectively, than a year ago, due to the hefty purchases before the Olympics in August.

Oil has fallen below $55 but China's domestic pump rates are still at where they were after the June price hike, just before crude hit $147 the following month, giving Chinese refiners a rare window to capture profitability. The country processed crude at 7.02 million barrels per day in October, the fastest annual growth since July, and the higher run rates diminished import requirements.

An industrial analyst discloses that tens of thousands of tons of imported refined oil products are flowing into the bonded areas and warehouses. Although the import prices are far lower than the domestic retailing prices, the domestic supply has already surpassed demand, but China's top two oil giants Sinopec and PetroChina are unwilling to sell their oil at a reduced price.