China diesel prices rise amid fears of shortages, tax hikes and pollution crackdown

The price of diesel in China has reportedly reached a rare premium due to fears of a shortage as Beijing continues its war on pollution and imposes possible tax charges.

Crude prices have jumped which meant a wholesale increase of 11% in diesel since October, putting the fuel at $1,011 per tonne. This places it at almost a $50 premium to petrol at the moment, according to figures from Longzhong Information Group.

Usually, diesel trades at a lower price than petrol but earlier this month it surpassed petrol in price by the highest amount in two years – around a $75 difference. At the moment, the market is actually well supplied but fear and uncertainty are hiking prices.

See also:  

China set to become largest oil importer

China to move to ethanol-based gasoline by 2020

Business Review Asia – November magazine

According to Li Yan, spokesperson from Longzhong: “Diesel prices have bene rising madly… almost every day…. Buyers were worried that if they don’t buy today the piece will go up more tomorrow.”

Diesel inventories have been decreasing over the past few years as Beijing’s reforms have favoured petrol, and as the Chinese government has stated that it will ban the sale of diesel and petrol cars in coming years.

From 1st November, high-sulphur diesel fuel used by tractors and trawlers was banned by the government. This came quicker than expected, and therefore some smaller refineries weren’t ready for the change and could not yet produce the low-sulphur alternative diesel.

However refiners in the country are still exporting diesel while the market is at a surplus.

There have also been rumours of a tax hike which have caused fear among buyers. In July, the government was said to be planning to introduce a levy on the “raw white oil” which is used in lubricants and cosmetics, but is also sold as a substitute for diesel.

Share

Featured Articles

Top 10 female executives leading Japan's charge for change

As Japan pledges a 30% target for women executives at big firms by 2030, we spotlight 10 female corporate leaders blazing a trail in the country

Top 10 most valuable unicorns in China – phones to drones

Home to the world’s most valuable unicorn, not to mention the fastest growing, China may be trailing the US on numbers, but it is catching up – and fast

Top 10 fastest-growing energy companies in the APAC region

Business Chief takes a look at the top 10 fastest-growing energy companies in the APAC region, according to rankings from S&P Global Commodity Insights

Top 10 Chief Financial Officers in India

Corporate Finance

Top 10 largest companies Malaysia and the CEOs who helm them

Leadership & Strategy

5 high-profile CEO moves across Asia-Pacific this month

Leadership & Strategy