Muted Chinese Recovery to Weigh on Diesel Demand

China’s lethargic economic growth has dampened its demand outlook for diesel, according to Reuters, and likely to support upcoming export quantities.

• Rystad Energy lowered its forecast for China's diesel demand in H2 2023 from 3.9 million b/d to 3.81m b/d. However, the revised figure is still up 3.8% on H1 2023.
• This follows the IEA’s August report which expected China's gasoil consumption in H2 2023 will fall by 150k b/d from Q2 levels.
• Diesel fuel is commonly used in China’s construction and manufacturing sectors, linking its consumption to the nation’s economic output.
• Diesel comprises the largest volume of fuel produced by Chinese refiners, totaling 4.3m b/d in July, or 28.2% of total throughput, according to official data.
• August diesel exports are estimated at 650-800k mt, down from around 1m mt in July, according to data from consultancy Longzhong.
• Chinese producers are awaiting the release of a new batch of export quotas. FGE predicts that 8m mt of licenses could be released in September.