Chinese refiners target U.S. gasoline market Updated 2:53 AM ET April 3, 2001 By Godwin Chellam SINGAPORE, April 3 (Reuters) - Chinese refiners, finding little demand for their product in Asia, are concentrating on shipping gasoline to the United States, traders said on Tuesday.

A slew of arbitrage cargoes have headed across the Pacific in the last 10 days, taking advantage of better prices and demand on the U.S. West Coast, traders said.

China only recently became able to ship gasoline to the United States following expensive upgrades to domestic refining units. The cargoes are used as blending components.

"In the past week at least five cargoes have been loaded and believed to be heading there," said one trader. "From a refiner's point of view, the arbitrage window between Asia and the U.S. opened at a very fortunate time."

A 60,000-tonne parcel of 90-octane gasoline was the latest shipment to join the flow eastwards, sold late last week by China National United Oil Corp (Chinaoil), a subsidiary of China's largest oil producer Petrochina.

The cargo was sold at a premium of 70 to 90 cents over Singapore naphtha quotes on a free-on-board (fob) Dalian basis, traders said.

"Arbitrage exports come as no surprise since Asian demand has been weak. Indonesia's decision not to import gasoline in April was especially tough for the market," a Singapore-based trader said.

Indonesia, through state oil company Pertamina, has regularly purchased at least one million barrels of gasoline since last October to bolster a shortfall in domestic production.

But the restart of the 125,000 barrel per day (bpd) Balongan refinery on April 1 has prompted Pertamina to withdraw from the spot market.

Other traditional markets for Chinese gasoline include South Korea and Vietnam.

GROWING TREND BUT MAINTENANCE MAY CAP EXPORTS

Market players said China was likely to continue pushing barrels to the United States as long as the economics were workable and the Asian market remained lacklustre.

Export volumes, however, might be capped over the next couple of months by scheduled refinery maintenance stoppages, they said.

"Both Chinaoil and Sinopec have some refinery units closed for maintenance during this period, so their exports may be crimped," a trader said.

The 100,000 bpd West Pacific Petrochemical Corp (WEPEC), operated by Petrochina, was shut in mid-March and will only resume production in late April.

Sinopec's 240,000 bpd Zhenhai refinery will shut a 164,400 bpd crude unit for three weeks in April.

Traders said the closures could cut Chinese gasoline export volumes by half. Chinaoil reportedly has a 30,000-tonne parcel of 90-octane gasoline available for late-April lifting and another similar-size cargo for May.

Sinopec, China's largest refiner, may have about the same number of cargoes available for export during this period, traders said.

http://news.excite.com/news/r/010403/02/energy-china-gasoline

-- Martin Thompson (mthom1927@aol.com), April 04, 2001