"The (diesel) market is still strong. We expect our runrate at 80 per cent in March and onward," said an official with one coastal refinery. Sinopec, which has a combined refining capacity of about 2.46 million barrels per day (BPD), or around 57 per cent of China's total crude run capacity, was now running its refineries at about 70 per cent of capacity. Refinery and trade sources in Shanghai said current gasoline stocks were higher than that held in the first two months due to lacklustre demand compared with gas oil inventory, which was still at a comfortable level. "Refiners are lobbying for a higher crude run in the second quarter in order tomaximise their profit. Every refinery is driven to meet their profit target set by Sinopec," said a refinery source.

Ex-refinery gas oil was priced at the Sinopec-set 1,960 yuan per tonne, up 30 yuan from one week ago due to a rise in demand as a result of the planting season which lasts from March to May.

Traders said ex-refinery gasoline prices had also firmed by around 100 yuan to around 2,180 yuan per tonne despite the high stocks. "People may be buying ahead of the fuel tax," said a Shanghai trader. China was expected to introduce its much-debated fuel tax in the third quarter, which would boost gas oil prices by 60 per cent and gasoline by 77 per cent.