Asia’s imports of key refined fuels such as gasoline and diesel fell to the lowest in four years in April, driven by a combination of refinery maintenance and weaker demand in the top-importing region.
Total imports of light and middle distillates were 166.37 million barrels in April, down from 195.54 million in March and the weakest since April 2020, according to data compiled by commodity analysts Kpler.
The sharp drop in April’s imports was largely the result of weaker shipments from key exporters of refined products.
India, the region’s top fuel exporter, saw exports of light and middle distillates slump to a 30-month low of 29.2 million barrels in April, down from 42.66 million in March, according to Kpler.
China, which has Asia’s largest refining capacity, saw its exports of light and middle distillates drop to 17.4 million barrels in April, down from 21.5 million in March and the lowest on a per day basis since December.
Singapore, the main Asian trading hub for crude and products as well as a refining centre, saw its light and middle distillate exports drop to a seven-month low of 25.1 million barrels in April from 26.15 million in March.
Some of the weakness in April can be put down to refineries undergoing scheduled maintenance, especially in India.
But there are also some signs of softness in other fuel exporters, with China’s refinery output being largely flat in the first quarter from the same period a year earlier, which limits the volumes available for export.
For the first four months of 2025, Asia’s imports of light and middle distillates totalled 746.73 million barrels, down 11.6% from the same period in 2024.
This decline would normally suggest that the profit margins for refiners would be coming under pressure as they compete for market share amid declining sales.
But so far this hasn’t happened, with the margin for a typical refinery in Singapore processing Dubai crude ending at $6.60 a barrel on Wednesday, not much below the recent 15-month high of $7.25 hit on May 5.
FUEL MARGINS
This is because the price of crude oil has declined faster from the high so far this year in January than the prices of gasoline and gasoil, the middle distillate that is the building block for diesel and jet kerosene.
Global benchmark Brent futures have slid 20% from the January 15 peak of $82.63 a barrel to Wednesday’s close of $66.09.
However Singapore gasoline has declined only by 12.5% to end at $76.15 a barrel on Wednesday, while gasoil has retreated by 17.5% to $16.24 on Wednesday.
This is a sign that refined fuel supply into Asia has been constrained, allowing refiners to maintain margins even in the face of declining crude oil prices.
However, the outlook for products such as gasoline and diesel may be darkening somewhat, as Asia’s economic growth is likely to be hit by the trade war launched by U.S. President Donald Trump.
While markets have cheered the recent moves to de-escalate tensions with China, and moves to strike deals with other major economies such as India and Japan, the overall picture is still that U.S. import tariffs are likely going to end up substantially higher than they were before Trump returned to the White House.
Even if trade deals are successfully negotiated, Asia’s exporters will face higher costs and more challenging market access to the United States.
A further threat to oil product demand also stems from the trade war, with Indonesia, Asia’s biggest fuel importer, indicating that it may buy more from the U.S. as part of a trade deal.
Indonesian Energy Minister Bahlil Lahadalia said on May 9 that the Southeast Asian nation may shift as much of 60% of its fuel buying from Singapore to the United States.
Increasing fuel imports from the U.S. is part of a wider proposal that Indonesia has made to Washington to address the tariffs, and Jakarta has indicated it wants to lift U.S. energy imports by about $10 billion.
Indonesia usually imports up to 14 million barrels of light and middle distillates each month, and changing to buying the bulk from the United States would disrupt regional flows of refined products.
Refiners would have to find alternative markets in Europe, Africa and Latin America, which would likely add to costs and lower profits.
Source: Reuters