Seoul - On top of stricter emission controls and a move toward
electric vehicles, Asia’s diesel traders now have to worry about sea cucumbers
A Chinese move to protect endangered marine creatures with a
fishing ban contributed to a drop in the so-called crack spread in
That’s because thousands of the country’s fishing trawlers idled between May and September won’t require the fuel at a time when supplies are usually ample as refineries return from maintenance work.
This isn’t the first time the traders have been rattled by
policy changes in
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The fishing ban, slower economic growth, and a move away from heavy industries in the nation could cloud the outlook for the fuel further, according to Fitch Group’s BMI Research.
“A nationwide fishing ban imposed in May will further hit
diesel consumption by
Overfishing coupled with rising demand for seafood have exhausted fish resources in China’s major rivers and seas, said Liu Xiaoqiang, an official at the Ministry of Agriculture’s fishery department. Among those in need of protection is the sea cucumber, hairtail and yellow croaker. Sea cucumbers, a revered luxury food item on the plates of wealthy Chinese consumers, have been harvested at an unsustainable rate, according to WorldFish, a non-profit research organization.
That has weakened the price of diesel, typically the fuel of choice for fishing boats, according to five traders and an analyst surveyed by Bloomberg. It also sent the crack spread for diesel in early May to its lowest level since August 2016. It was near $10 a barrel on Wednesday.
“Fishing activity in
Still, some analysts say that
More importantly, refineries are coming back online
following routine maintenance shutdowns, while
“While the fishing ban might have a short-term impact on
Chinese diesel demand, we see transportation and other industry developments as
being also highly relevant,” said Andrada Irimie, an analyst at JBC Energy
GmbH, a consultant in
“However, pressure is likely to stem from the supply side. As Chinese crude intake is seen rising over the coming months, we expect Chinese diesel supply to trend higher, resulting in a stronger export potential.”