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Everyone wants diesel at the moment - Seemorerocks
-- It will be major shortages in diesel fuel that will make it no longer possible to pretend. -- MCR
Diesel demand growth highest among oil products in China
30 March, 2012
BEIJING (Commodity Online): The growth rate for diesel in China has been the highest among the main oil products, as high as 7.9% per year. China’s diesel consumption in 2011 was 3.5 mb/d, more than 70% of which came from the transportation industry.
On the structural side, diesel fuel’s tight leverage to economic activity has been the primary reason for the extraordinary path taken by Chinese diesel demand. Significant government investment in the road system and a mandate in 2000 that all trucks should run on diesel by 2010 have also facilitated the rapid expansion of domestic diesel demand.
Beyond road transport, diesel also remains the primary fuel employed in China’s rail system and marine transport. The other factor supporting Chinese diesel burn is less structural but a hugely important swing at the margin, as it manifests through severe domestic shortages for diesel.
Administratively driven power cutoffs, strong harvest season, seasonal refinery maintenance, low hydro-power reservoir water levels and the Chinese government’s control of product prices negatively impacting oil refinery margins have all played a part in varying degrees in higher demand for diesel in the country.
Despite the increasing challenge posed by the lack of infrastructure, the rising level of agricultural and railway electrification, as well as energy saving vehicles (including CNG trucks), diesel demand should be able to maintain a growth rate of around 7.5% per year.
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