China’s fishing ban making life difficult for Asia’s diesel traders
SEOUL: On top of stricter emission controls and a move towards electric vehicles, Asia’s diesel traders now have to worry about sea cucumbers off China’s coast.
A Chinese move to protect endangered marine creatures with a fishing ban contributed to a drop in the so-called crack spread in Asia for diesel, a measure of returns from producing the fuel, to a nine-month low.
That’s because thousands of the country’s fishing trawlers being idled from last month to 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 the world’s biggest energy consumer. China raised its fuel standards for vehicles in January, leading its refiners to boost premium diesel output, in turn reducing the price spread between cleaner and dirtier grades in Asia.
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 China’s sizable boat fleet,” said BMI in a May 25 report. “With the Chinese economy set to slow down further in the second half of the year, demand for refined fuels could see added pressure in the coming months.”
China introduced the fishing ban on all four of its main seas on May 1, the first time it has synchronised dates for the moratorium for all offshore fishing.
The ban ends between August and September and is about a month longer than previous prohibitions, affecting almost 200,000 fishing boats and one million fishermen, according to the agriculture ministry.
That has weakened the price of diesel, typically the fuel of choice for fishing boats, according to traders. Bloomberg
A nationwide fishing ban imposed in May will further hit diesel consumption by China’s sizable boat fleet. FITCH GROUP’S BMI RESEARCH