China to cut gasoline exports to record low

China will cut gasoline exports in September by more than half to near their lowest on record, as strong domestic demand soaks up supply already stretched by lower output and maintenance, Chinese industry sources said on Thursday.

Gasoline exports are expected to fall to 90,000 tonnes next month from about 210,000 tonnes in August, the second lowest on record since 1999 and the smallest volume since January 2004.

Outflows have been declining since jumping by 340 percent in June versus a year ago and were up 83 percent in the first half, customs data showed, as seasonal peak demand kept exports at bay after refiners had been riding on a strong overseas market.

While Chinese petrol demand is robust on increased car ownership thanks to double-digit economic growth, independent players stocking up gasoline on hopes of price increases also squeeze the supply flow.

"Rising (global) oil prices since the second quarter prompted secondary and tertiary inventory build-ups by independent wholesalers and retailers, who expected the government to raise pump prices. That amplified apparent demand," said Yan Kefeng, of Cambridge Energy Research Associate Cera.

But with inflation at a decade-high of over 5 percent in July, a retail fuel price hike is not imminent.

China is overtaking Japan as the world's second-biggest gasoline consumer behind the United States, but the country's refiners have so far been able to meet domestic demand, avoiding imports that would drive up regional prices.

But lower motor fuel exports from China will underpin the Asian market, at a time when regional demand is getting stronger.

"Vietnamese imports needs are higher given zero import tax and lower pump prices, while Indonesia is buying more cargoes to stockpile ahead of the festive season," said a gasoline trader.

Robust demand, thin supply: State giants Sinopec Corp. and PetroChina are not expected to ship out cargoes, leaving export-focused West Pacific PetroChemical Corp (WEPEC) to move the 90,000 tonnes for September, down from its usual 120,000 tonnes a month.

The refiners strive to keep up with growing demand as driver's blast fuel-intensive air-conditioning during summer.