Bloomberg News

China 2012 Diesel Demand Growth to Fall, Deutsche Bank Says

February 01, 2012

(Updates with analyst comments in third paragraph.)

Feb. 1 (Bloomberg) -- Diesel demand growth in China, the world’s second-largest oil user, will decline this year amid a slow down in industrial activity, said Deutsche Bank AG.

Diesel consumption may increase by no more than 5 percent, down from 8 percent in 2011, Soozhana Choi, the head of Asian commodities research based in Singapore, said in an e-mailed report today. The fuel represents more than one-third of the country’s oil use and is tied to industrial output, which is expected to expand by 11.5 percent this year less than the 13 percent last year, according to the note.

“This indicates China’s diesel demand will moderate this year,” according to the note. “Refinery capacity additions suggest that China won’t need to pull in sizable diesel imports to meet its needs.”

China may add 330,000 barrels-a-day of new diesel production capacity this year, according to the report. That would be 70 percent more than was added last year. Total oil demand may climb by 5.5 percent this year, Deutsche Bank’s Choi said in a Nov. 11 note.

Demand for the fuel, used for cars, trucks and power generation, may climb if China experiences electricity shortfalls, the note said. Should that situation arise, the bank expects diesel growth of as much as 9 percent this year.

--Editors: Christian Schmollinger, Mike Anderson

To contact the reporters on this story: Chua Baizhen in Beijing at bchua14@bloomberg.net; Jing Yang in Shanghai at jyang251@bloomberg.net

To contact the editor responsible for this story: Mike Anderson at manderson34@bloomberg.net


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