China reduces diesel exports.

Byline: SINGAPORE:

China's state refiners will reduce diesel exports in July, as they target higher profit margins at home after two rounds of pump price hikes last month and deterred by the sluggish Asian demand.

The world's No 2 energy user will keep gasoline exports stable at 330,000 tonnes this month, in the face of rising car sales. Traders estimated July diesel exports to slow to 120,000 tonnes from 200,000 tonnes in June, as the country is also seeing signs of recovery in the economy, which is expected to grow about 8 per cent this year, the State Information Centre said. The shipments exclude diesel supplies in transit, or bonded diesel volumes, that are not for domestic sales. To capture better domestic margins, China's top dozen refineries will raise July crude run rates by 9-10 per cent to a record of 2.67 million barrels per day (bpd). Chinese state refiners are holding back more supplies in July, especially after the retail fuel price hikes spurred an 11 per cent rise in wholesale diesel prices last month. The two rounds of retail diesel price rise amounted to a whopping 17 per cent in June, above the 15 per cent increase in gasoline rates at the pumps, said US-based consultant Paul Ting. "This massive increase certainly increased the attraction of selling diesel in the domestic market. In addition, we note that diesel inventory has come down faster than gasoline inventory," he added.

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