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China auto fuel imports to fall in Olympics month
SINGAPORE (Reuters) - China will import less transport fuel in the month of the Olympics as domestic refiners raise output to ensure stable supply and as stockpiling slows amid a drop in crude oil prices, a Reuters survey showed.
The country will import 530,000 tonnes of diesel for August, almost 40 percent below last month¡¯s 860,000 tonnes, trade estimates showed, and off the 962,000-ton peak seen for June.
Gasoline imports for this month are seen at 210,000 tons against 300,000 tons for July and the record of 339,000 tons for May, when the country turned a net petrol importer for the first time ever.
Kerosene inflows will drop to 430,000 tons from 506,000 tons last month. Industry sources said import needs for the month would ease as China's top refineries were set to run crude at near-record.
A Reuters poll showed China¡¯s top 12 refineries, accounting for over a third of domestic capacity, would process 2.53 million barrels per day (bpd) of crude this month, the highest since February and near the record of 2.56 million bpd in June last year.
Some independent or ¡°teapot¡± refiners, which meet 15 percent of Chinese oil demand, are also running on crude supplied by top state refiners Sinopec and PetroChina, said a China-based source familiar with teapot operations.
Most of these private refiners had been forced out of action in earlier months by costly crude feedstocks.
Apart from obligations to keep the market well-supplied -- at a time the Olympics host comes under international spotlight -- the fuel price hike in June has helped cushion some refining losses and encourage production rate hikes. Beijing raised retail gasoline and diesel prices by 17-18 percent, the first in eight months and the sharpest hike ever.
"The fuel price hike will have some impact, mainly on domestic production. At the same time, crude prices came down so stockpiling will slow down,¡± said Yan Kefeng, a senior China oil and gas analyst at Cambridge Energy Research Associates (CERA).
"When crude goes down and if the government adjusts prices downwards, wholesalers will not want to buy and hold and make a loss when prices really drop. That¡¯s how the market works,¡± said Yan, who is based in the capital, Beijing.
Recent falls in crude oil by more than $20 a barrel from the record $147.27 hit on July 11, have led to a decline in wholesale prices in China.
Wholesale diesel prices in the booming Guangdong province fell to 7,700 yuan a ton, versus around 7,800 yuan last month, an industry source said.
Traders said profits have returned to focus as oil product inventories in China have reached a level secure enough for August to pass smoothly, after months of binge-buying this year.
China¡¯s heavy diesel appetite in the last two quarters had tightened the global supply pool already strained by growing demand, while the flip into net importer by Asia¡¯s former top gasoline supplier had helped pick up the slack in the regional market left by dismal U.S. demand this year.
Tax breaks
Beijing had granted tax rebates to Sinopec and PetroChina for some gasoline, diesel and crude imports in past months, up till the second quarter, to offset some losses made by buying at international prices.
The government also dished out subsidies to help balance the refiners¡¯ books, which have been under pressure from crude¡¯s run above $100 a barrel this year. ¡°These subsidies and tax breaks do affect imports quite a bit,¡± said a trader familiar with Chinese oil product trades.
While a newsletter run by the official Xinhua news agency said China plans to extend the tax incentive for the motor fuels and subsidise crude purchases through the third quarter, no official word has come from the government.
Sinopec received a roughly 30 billion yuan ($4.4 billion) subsidy in the first half, industry sources told Reuters last week, but it was unclear if the grant would continue. PetroChina said last week the firm had not been notified if a tax rebate on crude imports would be extended past the second quarter.
While uncertainty remained over the incentive schemes, motor fuel demand is expected to dip as the government attempts to clean up Beijing¡¯s air for the world¡¯s top sporting extravaganza.
The government has cleared half the capital¡¯s 3.3 million cars from the streets by limiting vehicles with odd or even license plate numbers on alternate days and shut dozens of factories.
If the city¡¯s chronic air pollution persists by the time the Games starts four days later, the government may pull more cars off Beijing roads, extend the odd-even number system to nearby Tianjin and four urban areas in Hebei province, and shut over 200 more factories.
From: Reuters |