* Oct. implied diesel demand highest since March
* Demand up on higher construction activity, heating
* Stocks at record low
By Jessica Jaganathan
SINGAPORE, Dec 29 China's diesel demand is
likely to pick up pace ahead of the Lunar New Year as traders
stock up barrels ahead of the festivities and as construction
activity picks up in some areas, four trade sources said on
Implied diesel demand in October in China, the world's
second-largest oil user, rose to 3.4 million barrels per day, up
6.4 percent from September and 1.3 percent higher than the same
time last year, according to Reuters calculations using official
That is the highest level since at least March this year
with implied diesel demand rising in only three months so far
this year, the data showed.
Demand for diesel in November to December is expected to be
even higher, traders said.
"China is having many policies to boost the economy now, so
demand will pick up a bit, but by how much is a question," said
a source with a state-owned refiner.
China's economy looks set to hit its 6.5 percent to 7
percent growth target as increased government spending and
increasing housing demand spur a construction boom.
Diesel is used to power trucks for industry and for
First-quarter Chinese diesel demand may rise by 75,000 bpd
from the year ago period, based on the industrial recovery,
consultants JBC Energy said in a note on Thursday.
Demand is also picking up ahead of the Lunar New Year period
as traders start to stockpile the fuel and as winter consumption
of the fuel has increased for heating and back-up power
generation, a second source with a state-owned refiner said.
"China has also been increasing the retail prices, so demand
from traders is picking up as they start to fill up tanks," the
source added. China will raise retail diesel prices by 95 yuan
($13.66) per tonne from Thursday, its third increase since Nov.
China's diesel stocks at the end of November fell to a
record low after refineries tempered production while they
upgraded facilities to produce higher-quality fuels in order to
meet stricter emissions limits that the country is introducing
from Jan. 1.
Regulations introduced in September that imposed stronger
penalties and ramped up inspections to prevent trucks being
overloaded with goods also boosted demand for diesel, traders
"The trucks have to make more trips, so this consumes more
diesel," a shipping source said.
($1 = 6.9532 Chinese yuan renminbi)
(Reporting by Jessica Jaganathan; Editing by Christian