February 14, 2011 / 5:12 AM / 8 years ago

UPDATE 2-China Jan crude imports up 27 pct; diesel stocks high

* Jan crude imports +27 pct on yr at 4th highest on record

* Refiners up runs amid drought; margins start to hurt

* Jan net fuel imports -17 pct vs Dec

* Sinopec says diesel stocks at record high

By Chen Aizhu and Judy Hua

BEIJING, Feb 14 (R euters) - China’s crude oil imports in January rose 27 percent from a year-ago to the fourth highest on record, as refiners raised production and beefed up diesel inventories to fight a drought.

China, the world’s second-largest crude importer, which consumes one tenth of global supplies, is raising refinery production to new highs to boost diesel supplies amid a severe domestic drought, lending support to oil prices with Brent futures hovering above $100.

China brought in 21.8 million tonnes of crude last month, or 5.13 million barrels per day, according to data published on Monday at the website of the General Administration of Customs (www.customs.gov.cn), a level some 1.1 million bpd above the same month in 2010.

But with February a holiday month and three days shorter than January and at least two main refineries entering major overhaul in March and April, it may take a while for China to surpass its record in crude imports posted last September at 5.67 million bpd.

Oil firms were also awaiting the government to raise retail fuel prices as margins started to hurt this month. Beijing last raised pump rates on Dec 22 by about 4 percent to record highs.

“If crude prices hold while the government drags on and does not raise prices till March, there is little incentive for refiners to build crude stocks,” said a refinery official with Sinopec Corp .

But the start of spring planting and the additional diesel needed to quench arid fields at top wheat producing provinces have led some traders to predict stronger demand for foreign crude imports in the coming months.

“As North China is suffering from severe drought now and spring ploughing will start in a month or two, oil companies will imports more crude to ensure diesel supply. Crude imports could be close to its record highs over the next few months,” said a Chinese crude trader.

RECORD DIESEL STOCKS

The higher January imports were made as China’s top oil plants raised their operations by about 3 percent last month, according to monthly Reuters polls.

China is expected to release its January oil output data in March.

Sinopec, Asia’s largest refiner, said on Sunday its diesel stocks surged 93 percent from levels late last year when a diesel shortage occurred, after boosting its daily operations at unprecedented highs.

The swelling stocks already prompted the refiner to resume diesel exports this month after a brief halt in January, with one Sinopec trader confirming 100,000 tonnes overseas sales for February, in line with earlier trader estimates.

China, which now imports some 55 percent of its total crude processed, wrapped up 2010 with a record incremental demand increase of nearly 1 million bpd and record incremental crude purchases of 710,000 bpd.

Crude imports last year grew 17.5 percent to 4.79 million bpd.

China remained a net importer of refined fuel in January, with net fuel imports at 1.71 million tonnes, 17 percent lower than in December, the data showed.

Analysts have predicted that China will log growth of 5-7 percent in total oil demand this year, around half the 2010 pace but still the fastest among major consuming countries.

(Reporting by Chen Aizhu, Jim Bai and Judy Hua; Editing by Ken Wills)

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