Asian diesel premiums hold at pre-war levels as spot demand cools

what happened

According to Reuters, Asia's diesel market lost some momentum on Monday, with time spreads and cash premiums both easing and almost no spot deals done. A Thailand-based refiner was still offering November cargoes through a tender closing on October 21, while northeast Asian refiners sold less spot product after many had already covered most of their November volumes.

Refining margins slipped to roughly $62 a barrel. The gasoil cash premium narrowed to 86 cents a barrel, a level still close to where it stood before the war. In jet fuel, the regrade eased to a 75-cent premium, and some second-half November cargoes were reportedly sold at a discount.

China's refined product exports rose 39.4% year on year in September, with diesel shipments at their highest in more than three years, as the Iran war and other conflicts restrict output in the Middle East and Russia. China's refinery throughput edged up for a third straight month. Australia's Ampol cut its fourth-quarter forecast for higher-value products at its Lytton plant after bringing repairs forward, and its shares fell despite a jump in third-quarter refining margins.

why it matters

A shortage of middle distillates keeps physical diesel and jet prices supported, yet cash premiums have stopped rising, pointing to more cautious spot buying. For markets, gasoil crack spreads and Asian refining margins are the key gauges to watch, while Chinese export volumes remain a swing factor in the weeks ahead.

market impact

Diesel and jet fuel: weak spot demand and Chinese exports weigh on refining margins and crack spreads

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