Forecasters are revising their diesel demand outlook for the rest of the year on slower-than-expected Chinese economic growth, Reuters has reported, noting this would mean exports of the fuel from China would likely remain robust.
Citing data from Rystad Energy and the IEA, the report said that the weak growth in demand for the fuel that keeps economies going will likely extend into 2024.
According to Rystad Energy, demand for diesel in China will grow by 3.81 million bpd in the second half of the year. That’s down from an earlier forecast of growth at 3.9 million bpd.
The revision is moderate, and second-half growth would still be 3.8% higher than first-half growth in diesel demand, Reuters noted.
The International Energy Agency, meanwhile, has reduced both its outlook for diesel and gasoil demand in China, seeing diesel demand growth specifically 127,000 weaker than it did in March this year.
The reason for these revisions is lower than previously forecast economic growth, with a Rystad Energy analyst saying that “Diesel demand is still growing, but at a lower-than-expected rate.”
Lin Ye cited China’s troubled real estate sector and a worsening trading environment.
Rising diesel stocks in China also contributed to the bearish mood of forecasters, Reuters noted in its report.
For much of this year, demand for diesel was seen as strong on a global level, prompting concern about possible supply shortages. However, weak economic growth in Europe and the U.S., and the prospect of recession in some EU states eventually tempered that concern and motivated demand forecast revisions.
These revisions, interestingly, came despite strong diesel demand data in all parts of the world earlier this year. High profit margins for diesel exports from China to the rest of Asia also support the perception of strong diesel demand, despite the challenges.