1. China’s Diesel Renaissance Is Not Happening
- Analytics firms have been cutting their Chinese diesel demand outlooks for 2023, with Rystad and the IEA cutting 100,000 b/d and 150,000 b/d from earlier forecasts, respectively, as China’s weak construction sector and weakening manufacturing activity weigh on diesel.
- Diesel is a key product for Chinese refiners, making up 4.3 million b/d of total products output or 28.2% of total throughput, however it seems post-opening China can’t grow its demand for diesel.
- Whilst Chinese refining has been operating at high rates, stagnant diesel demand at 3.7 million b/d (a level which the IEA expects to remain stagnant in 2024) have led to a build-up in diesel inventories across China, up at 16.4 million tonnes.
- China’s real estate sector has been a key outlet for diesel consumption for construction equipment and machinery, however with new property construction down 71.7% compared to the 2019 average, there is very little support coming from the property segment.
2. El Nino Is Back, Disrupting Latin America’s Power Supply
- The return of the El Nino climatic phenomenon, characterized by unusually warm ocean temperatures and subsequently hotter weather in general, spells trouble for Latin America’s electricity markets.
- The US National Oceanic and Atmospheric Administration believes there is over a 90% probability that a moderate El Nino…