China's fuel oil demand may fall by about 10 percent this year after non-state-owned refineries shut processing units because of rising costs and the nation's power utilities switched to gas to generate electricity.

Asia's biggest fuel oil importer may consume 43 million metric tons of fuel oil, compared with 48 million tons in 2006, Gong Jinshuang, a Beijing-based senior analyst at China National Petroleum Corp., the nation's largest oil company, said by phone today. The country's net fuel oil imports may fall by 11 percent to 22.5 million tons this year, he said.

The price of fuel oil in Asia rose to a record $410.5 a ton on July 20, boosting raw material costs for power utilities and so-called teapot refineries, or privately owned processing plants. Refiners are shutting units as processing fuel oil into diesel and gasoline becomes unprofitable because China controls energy prices to curb their impact on inflation.