China to maintain curbs on April fuel exports, eyes fuel hike

* State refiners to cut or halt fuel exports in April

* Domestic gasoline supply tight

* Speculation of a fuel hike of 3-5 pct

By Aizhu Chen

BEIJING, March 30 (Reuters) - China will extend curbs on gasoline and diesel exports in April to ease tight supplies in the domestic market, while another fuel hike of up to 5 percent may come as early as next week in what will be the second increase this year, industry officials said on Wednesday.

Refineries under state-run Sinopec Corp and PetroChina were told by the government to cut or halt overseas shipments of gasoline and diesel next month, extending a curb since earlier this year.

"We don't have a plan to export diesel or gasoline in April...We were asked to boost gasoline production," said an official with a top Sinopec plant.

"There is a quota limit for next month. Our gasoline exports will be cut by one or two cargoes," said a second refinery official with PetroChina.

With benchmark Brent crude LCOc1 hovering near $115 a barrel, Chinese refineries have come under greater pressure to pass on swelling crude costs into state-set fuel prices.

Top Asian refiner Sinopec Corp reported on Monday a drop of nearly 13 percent in its refining margins in 2010 versus 2009. [ID:nL3E7ES1R0]

Unless the government raises retail fuel prices soon, plants would be tempted to trim production to stem losses, officials said.

"The window for a price hike opened last week...We will see a much larger loss next month when crude cost will be calculated on the March prices," said the PetroChina source, adding the upward price pressure from the unrest in Libya and the Middle East may take a while to taper off.

"Without a fuel hike, plants will have to trim runs as each of us has an annual profit target. Personally, I don't want a fuel hike as a driver."

Industry officials were punting for an increase of between 200 to 400 yuan ($31-$61) per tonne for gasoline and diesel, or an increase of 3 to 5 percent as early as in coming weeks, which would bring China's pump rates to new highs.

The world's No.2 oil user last raised pump prices by 4-4.5 percent on Feb. 20, and the government said the raise was aimed at both taming the demand and cushioning refineries from high crude costs. [ID:nTOE71I00P]

The soaring crude costs have already forced cutbacks in operations by local, independent refineries, also known as "teapots", which are more margin-sensitive, contributing to a recent shortage of gasoline, which was largely spurred by refiners' shift to more lucrative aromatics production.[ID:nTOE72702X]

Beijing sets its retail gasoline and diesel prices under a scheme that tracks crude prices and more or less guarantees a refining margin when crude is under $80 a barrel.

But once crude climbs above $80, the link becomes loose and other factors such as the country's consumer price index, local demand and supply comes into play. For the whole of 2010, China lifted prices by a total of 9 percent.

(For a table of China's fuel price history:[ID:nTOE71I00R])

"The government may well opt not to raise prices so soon considering the pass-on effect on transportation cost, vegetable prices and public opinion on the Internet," said a Sinopec fuel marketing official. (Reporting by Chen Aizhu; Editing by Jacqueline Wong and Ken Wills)