ANALYSIS – Asia diesel market seen going from bad to worse

SINGAPORE (Reuters) – After falling to near five-year lows, Asian diesel margins may be in for still deeper losses as a worsening global economy deals a harsh blow to industrial and transport demand for a product that two years ago led the barrel.

The grim signs are everywhere: refineries reining in output; traders seeking to keep the fuel in tankers due to a shortage of onshore storages; new Indian supplies flooding the market, even as major buyers like Vietnam become more self-sufficient and Indonesia halts imports due to brimming inventories.


“It seems we are in for a storm,” said a trader in Singapore, who declined to be named due to company policy.

As demand from Indonesia and China wanes, traders have pinned their hopes on an unlikely outlet — lacklustre Europe, where the share of diesel used for passenger travel is relatively higher than the hardest-hit industrial and trucking transport sectors.

Arbitrage sales will hit 635,000 tonnes this month, the highest since last October’s record 800,000 tonnes.

Reuters