Low diesel sales show China's engine slowing down

China is not likely to import diesel fuel for domestic use the rest of the year due to weak demand, brought about by a slowing economy, industry sources said. This puts pressure on margins of the most widely consumed fuel in Asia and may possibly cause reversing high prices for the fuel in the West. Consumption of iron ore, steel and copper has also fallen in recent months. Diesel is typically the main output of China’s refineries but it normally starts buying at this time of the year on the spot market to meet peak demand from agriculture and for power generation.
The fact that China is still exporting, even in small volumes, indicates that there is sufficient supply for the corresponding demand. China’s top refiner Sinopec Corp. is exporting about 60,000 tons of diesel a month. This is in sharp contrast to the last two years when Chinese refiners imported more than 300,000 tons of diesel for November and December, one of the biggest purchases of the year for domestic use. Purchases typically start from late September to October. China earlier raised retail prices of diesel by 6.5%, further squeezing domestic demand, traders said. (September 27, 2012)