China’s diesel demand woes

Faster-than-expected economic growth fails to mask macro imbalances and shifting structural oil product trends

While China’s economy in Q1 2024 grew faster than expected (5.3% versus consensus forecasts of 4.9%), well-documented macro imbalances remain, including a property slump, weak consumer demand and mounting local government debt. How China manages its macro pivot from the debt-fuelled growth of the mid-2000s to a new economic orthodoxy centred on clean energy manufacturing remains unclear. What is clear is that China’s oil product balances have been reflecting structural changes in the economy for more than a year now. This includes greater petrochemical integration, higher LPG/naphtha usage and a tilt away from transport fuels to chemicals. Underpinning this transition has been the expectatio