German diesel imports rise despite low domestic demand

Declining Ice gasoil futures have boosted diesel imports into Germany and domestic demand for heating oil, but diesel demand continues to lag behind expectations.

The continued drop in Ice gasoil futures on 5 August, coupled with rising stocks, led to falling gasoil prices in the Amsterdam-Rotterdam-Antwerp (ARA) trading hub. As a result, some German market participants imported more middle distillates into Germany in the first half of the week.

Diesel prices in Germany reached their lowest since the end of June 2023 on 6 August, but this did not have a major effect on the quantities of traded volumes reported to Argus. Demand from construction, logistics and agriculture is not picking up properly, according to traders, one reason being the continuing weak economic situation in Germany, which has not yet recovered from the effects of inflation, higher energy prices and global supply shortages. Persistently subdued demand from relevant sectors, along with falling prices, is leading to a significant drop in diesel refining margins, which are at their lowest since late May 2023.

In contrast to diesel, domestic heating oil demand has picked up again — traded volumes of heating oil reported to Argus increased for a sixth consecutive week. Increased buying interest resulted mainly from supply worries as a result of increasing tension in the Middle East, coupled with the sharp price decline. Unlike diesel, consumers of heating oil usually use periods of low prices to top up their tanks in time for the heating season. Hence, volumes of heating oil reported to Argus increased by 12pc compared with the previous week, while traded spot volumes for diesel fuel only increased by 2pc.

By Johannes Guhlke