BEIJING - China became a net diesel exporter in October for the first time since August 2007 and remained a net gasoline exporter for a second month, as heavy inventories and higher refinery output lessened import needs.

The latest trade figures are ill-bodings for the global refining industry, which had counted on China's appetite for fuel stockpiling in the months leading to the August Olympics to pick up the slack left by an economic and consumption slump worldwide.

China imported just 80,000 tonnes of diesel last month, compared with 110,000 tonnes in exports, preliminary data from the General Administration of Customs showed on Monday.

The 46.4 percent slide in diesel imports from a year ago, while a stark contrast to the 266.5 percent annual growth in September to 338,838 tonnes, was above expectations of regional traders who forecast no diesel imports at all for the month.

While more than anticipated, analysts said the softening diesel import demand would hit refiners as far off as Europe that supply China's previously hearty thirst for the fuel.

For a table on October product trade flows: [nPEK77053]

China, formerly top gasoline supplier in Asia, shipped out 210,000 tonnes of petrol last month versus 31,533 tonnes in imports, the data showed.

The October net exports of 178,467 tonnes were more than double the 78,602 tonnes chalked up in September, when China first returned from being a net gasoline importer in the four months leading up to the August sporting extravaganza.

Exports of both gasoline and diesel in the first 10 months of the year were still 65 percent and 33 percent lower, respectively, than the same period a year ago, due to the hefty purchases made before the Games.

HIGHER CRUDE RUNS

Oil CLc1 has fallen below $60 but China's domestic pump rates are still at where they were after the June price hike, just before crude hit $147 the following month, giving Chinese refiners a rare window to capture profitability.

The country processed crude at 7.02 million barrels per day (bpd) in October, the fastest annual growth since July, and the higher run rates diminished import requirements.

China's two state-owned oil giants, Sinopec (0386.HK: Quote, Profile, Research, Stock Buzz) and PetroChina (0857.HK: Quote, Profile, Research, Stock Buzz), also have to draw down their heavy inventories of motor fuel, which in September stood at 31 million barrels in total for gasoline and 47.6 million barrels for diesel, state media had reported. [nSIN361420]

But of greater concern are the growing signs of slowing demand in the world's number-two oil consumer, which is counted upon by the world to help support faltering consumption, especially in developed nations.

Industrial output in October slowed to its weakest pace in seven years, as exports suffered from poor demand in major consuming nations, putting a lid on energy needs.

The country's top oil firm, China National Petroleum Corp (CNPC), said over the weekend that the global financial crisis has caused demand to contract sharply, especially since September, hurting sales and causing a spike in inventories. [nPEK258668]

But analysts see hope in the massive stimulus plan Beijing is unleashing to rejuvenate the economy, which they say will be needed to help boost demand for domestic commodities and increase energy consumption.

(Additional reporting by Beijing newsroom; Editing by Ramthan Hussain)

(Reuters, Nov 17, 2008)