Singapore (Platts)--23Apr2008

Chinese gasoline imports are forecast to exceed 200,000 mt in May, as
China strives to plug supply shortages amid strong domestic demand, heavy
refinery turnarounds and renewed efforts to build stocks, trading sources said
this week.
Traders estimate Chinese state-owned traders Unipec and Chinaoil have
already bought up to 240,000 mt of gasoline for May.
The majority of the volume is 93 RON gasoline, bought at premiums around
$2.40-$2.50/b to the Mean of Platts Singapore 92 RON gasoline assessments on a
FOB Singapore and Taiwan basis.
The volume of May imports is higher than the 160,000-200,000 mt for
April. Apart from heavy refinery shutdowns planned for the second quarter of
2008, increased domestic demand and efforts by refiners to build stocks is
leading to higher imports.
Under a new government regulation Chinese oil product wholesalers
will be required to keep stocks equal to at least a 15-day average of the
previous year's sales volume. This new measure kicks in from May 1.
This is part of a new set of criteria for oil product wholesalers, which
include qualification norms and how their businesses should be run.
However, while China's import volume in May is higher compared with
April, it is well below the monthly average of about 330,000 mt, on which CNPC
and Sinopec are eligible for a refund of the 17% value added tax. Both these
state-owned oil companies can get the tax refund on a total of 1 million mt of
gasoline imports in Q2.
But the VAT refund is largely considered as being insufficient to cover
import losses as domestic state-set guidance prices are seen as too low.
"The VAT refund was expected to cover part of our losses, but it does not
help a lot," a source with CNPC subsidiary PetroChina Guangzhou said.
Meanwhile, gasoline and gasoil supplies were said to be tight in south
China last week, as a result of low oil product supplies from domestic
refineries and limited imports by oil companies, Platts weekly survey showed
Wednesday.
Data from China's customs bureau showed the country imported 76,654 mt
(7,240 b/d) of gasoline in the first quarter of the year, up 190.5% from the
same time last year.
Exports between January and March this year totaled 300,000 mt, a drop of
82.2% year on year.
--Irene Tang, irene_tang@platts.com