Analysis-China's sputtering economy curbs outlook for diesel demand for rest of 2023
By Andrew Hayley
BEIJING (Reuters) — China's muted economic growth in 2023 as its post-COVID recovery underwhelms has crimped the outlook for demand for diesel fuel, the oil product that is the lifeblood of the economy, paving the way for continuing firm exports.
Lower forecasts of Chinese diesel consumption further illustrate the struggles of the world's second-largest economy and oil consumer to regain its footing following the pandemic. With equipment idling as construction slows and dwindling exports curb manufacturing, diesel demand is likely to ebb.
Rystad Energy lowered its forecast for China's diesel demand for July to December this year to 3.81 million barrels per day (bpd) from an earlier outlook of 3.9 million bpd, though the new forecast is up 3.8% from the first half of 2023.
The International Energy Agency (IEA) expects China's gasoil consumption in the second half of the year to fall by 150,000 bpd from second quarter levels, it said in its August oil market report.
«Diesel demand is still growing, but at a lower-than-expected rate,» said Lin Ye, a Beijing-based downstream analyst at Rystad, citing the ailing property sector and deteriorating trade environment.
Diesel accounts for the largest volume of fuel produced by Chinese refiners, making up 4.3 million bpd of fuel output in July, or 28.2% of total throughput, according to official data.
Amid a slew of disappointing Chinese economic data, analysts have lowered their full-year outlooks for diesel usage as well. Since March, the IEA has cut its 2023 forecast by 127,000 bpd. Rystad reduced its estimate by 94,000 bpd this month.
The weakness is expected to persist into next year, with the IEA in June forecasting that 2024 demand would grow by only
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