Much of the pullback in diesel demand can be tied to trucking, which consumes about 60% of diesel in China and more than 70% in the US. The number of trucks running on Chinese highways fell 8% in the week ended April 9, according to data tracked by China’s Ministry of Transport. Commercial diesel stockpiles nationwide excluding state refineries ballooned to an eight-month high in early April, according to OilChem data.
The demand drop comes after China’s manufacturing activity eased unexpectedly in March, according to a private survey, leading a slide in factory gauges across Asia. Emerging markets in the region including Indonesia — where the government has started cutting subsidies for fuel — are also seeing demand weaken as growth slows, said Daphne Ho, senior analyst at Wood Mackenzie.
Similar trends are playing out in other parts of the world.
“European demand has been soft through winter on muted heating demand, and macro headwinds are clouding the demand outlook,” said Koen Wessels, senior oil products analyst at Energy Aspects Ltd.