BAKU, Azerbaijan, March 25
By Leman Zeynalova – Trend:
The long-term view is still for the global diesel market to remain in a surplus well into the mid-2020s due to rampant growth in global refining capacity and structural demand slowdowns across developed markets (DMs), Trend reports citing Fitch Solutions.
An onslaught of new refining capacity additions is due to hit the global oil market over the next five years adding to the supply and demand imbalance, the company said in its latest report.
“Of the 3.4mn b/d of new capacity that are set to be constructed between 2021 and 2025, 54 percent of it will be built in Asia with the bulk of the newbuilds designed to maximize the production of middle distillates and lower-sulphur fuels. Excess diesel created by the surge in refining output may struggle to find homes, more so as DM growth slows. Indeed, more of the world’s DMs have set forth aggressive energy transition plans and have committed to at least a partial phasing out diesel cars from roads within the next few decades,” said Fitch Solutions.
Europe, the second largest diesel market after Asia, remains the most robust in terms of its anti-diesel policies, according to the company.
“This will be due to tightening environmental standards, legislative pressure against sales of internal combustion engines (ICE), increasing cost of emissions control technology and growing attraction of alternative-fuel vehicles. Consumer trends in both car sales and new car registrations point to a market that is rapidly turning away from diesel, with more than 20 cities to date already having agreed on long-term deadlines to remove all diesel, ICE-engine cars from roads.
The share of diesel cars in all newly registered cars in Europe fell to just 28 percent in 2020, down from 30.5% in 2019 (and marking the lowest market share since 2001) according to statistics from the European Automobile Manufacturers Association (EAMA), with further room for moves to the downside as auto fuel policies are expected to tighten.
Of the Asian DMs, Japan, Singapore and South Korea are among those to have made public their net zero ambitions and next to plans to phase out diesel cars from roads before 2030. The secular demand declines in DMs will be partly offset by stronger growth prospects in the EMs, as these markets are expected to remain reliant on the fuel as inputs for their heavy industries and manufacturing-driven economic growths,” reads the report.
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