Takeaway

The presenter argues that the global diesel market will remain tight. While China could expand its diesel export capacity, the potential increase of 150,000 to 200,000 barrels per day is insufficient to offset the roughly 700,000 barrels per day of Russian diesel that has left the market.

What the presenter said

• China's refined fuel exports have increased slightly from recent lows. [00:00]
• However, China is not fully capitalizing on high crack spreads due to strategic concerns over maintaining sufficient domestic fuel supply. [00:06]
• The presenter notes that China's potential diesel capacity expansion could add 150,000 to 200,000 barrels per day. [00:35]
• This is compared to the estimated 700,000 barrels per day of Russian diesel that is off the market. [00:45]
• The conclusion is that China's potential increase will not fill the Russian supply gap, and China is unlikely to "save the day" for diesel supply as it did in 2022. [01:00]

Trade ideas

The presenter did not state an actionable trade idea. The market view is bullish for diesel, based on the analysis that a significant supply shortfall from Russia is unlikely to be filled by increased exports from China.

Levels and data cited

• China diesel capacity expansion: 150,000 to 200,000 barrels per day (StoneX estimates).
• Russian diesel off market: About 700,000 barrels per day (Speaker).

Risks and what would invalidate this

• The presenter notes that the exact amount of Russian diesel off the market is "give or take," depending on which refineries are being repaired or are under attack.