OREANDA-NEWS. March 01, 2011. China, the world’s biggest energy consumer, bought more diesel from overseas than it exported for a second month in January as the nation built fuel inventories amid increased demand from drought-hit farmlands.

Net diesel imports reached 87,412 metric tons last month, according to data from the Beijing-based General Administration of Customs. Purchases of the fuel surged 82 percent to 183,298 tons compared with a year earlier.

Farmers in the world’s largest grain-consuming nation stepped up use of energy-intensive equipment to pump water into wheat fields as a drought cut production in provinces including Shandong, Jiangsu, Henan, Hebei and Shanxi. China Petrochemical Corp., the nation’s largest refiner, said on Feb. 12 it was producing and storing diesel at a record pace to boost supplies to dry areas.

“There was demand when they were rebuilding diesel inventories, but China will probably return to being a net exporter of diesel next month as that demand starts to come off,” Brynjar Eirik Bustnes, an oil and gas analyst at JPMorgan Chase & Co., said by telephone from Hong Kong.

China’s diesel inventories expanded 25 percent as of the end of January compared with December, China Oil, Gas and Petrochemicals, published by the official Xinhua News Agency, reported this month.

Diesel Demand Weakens
Diesel consumption may be damped further as China’s winter heating demand wanes with warmer temperatures. The high in Beijing reached 7 degrees Celsius (44.6 degrees Fahrenheit) today, according to data on the China Meteorological Administration’s website.

China International United Petroleum & Chemical Corp., the country’s biggest oil trader, said it plans to export 100,000 tons of diesel in February after halting exports for two months.

The profit from producing diesel in Asia may decline as much as 40 percent in the next three months as Chinese refiners start exporting the fuel, according to industry researchers FACTS Global Energy and KBC Energy Economics.

In December, China turned a net importer of diesel for the first time since November 2008 as electricity rationing forced some factories to turn to their own diesel-fueled generators. Net diesel imports reached 290,000 tons in that month after China more than tripled overseas purchases to 460,000 tons compared with November, customs data showed.

‘Teapot’ Refineries
Imports of fuel oil graded No. 5-7 rose 76 percent to 2.24 million tons in January and exports fell 3.2 percent to 766,723 tons, today’s customs data showed.

China’s independent, or so-called “teapot,” refineries may have bought more fuel oil to make gasoline and diesel in anticipation of higher retail fuel prices, Bustnes said.