China imported more than 230,000 tonnes of diesel in March, volumes not seen in almost three years, according to latest customs data.

But the move is likely related to trading rather than an improvement in domestic demand, traders said.

China imported 233,055 tonnes of diesel in March, the highest monthly figure in nearly three years, the data showed. China last regularly imported more than 200,000 tonnes of diesel in June 2012, due to firm domestic demand, traders said.

The majority of the barrels in March were shipped from South Korea, with some coming from Singapore and Thailand, the data showed.

China's last substantial imports were in December 2014 when it imported 133,603 tonnes of diesel, though the volumes were nearly half of March's figure.

Still, China remains a net exporter of diesel, shipping out 300,231 tonnes of the industrial and transport fuel in March, its highest exports since October last year when it exported 345,716 tonnes, customs data showed.

The high exports suggest that the imports are not related to demand, traders said.

The world's no. 2 oil consumer flipped into a net diesel exporter in mid-2012 due to a slowdown in its economic growth.

China's customs figures do not fully reflect China's diesel imports or exports, since they also include transit barrels shipped to tax-bonded storage, which may not be destined for China.

"The imports could be going into bonded storage as back in February, the gasoil contango was around 70 cents a barrel," a China-based industry source said, referring to the time spread between February and March.

With storage costs estimated at around 80 cents a barrel in Singapore, traders usually explore storing oil product when the time spread widens.

"Some contango play might have triggered the imports with the cargoes arriving in March," the source said, adding that at least two vessels have shipped gasoil into tanks in Hainan.

Source: www.reuters.com

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