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Australia set to boost imports of diesel to power coal mines

Tuesday, November 8, 2016 - 13:26

[SINGAPORE] Australian imports of diesel are set to grow as miners in the country rev up generators used to power pit operations following a resurgence in coal markets, trade sources said on Tuesday.

Prices for coal have more than doubled this year after China moved to buy more overseas, with miners in top producers such as Australia pushing to meet demand.

That is expected to ramp up appetite for the diesel they need to power mines, stoking the amount of profit made on refining the fuel, which in early November had already hit its highest in nearly a year. "Demand (for diesel) is better this year than last year ... the (coal) mines are restarting slowly," said a trader who supplies diesel to Australian mines. He declined to be identified as he was not authorised to speak with media.

A second trader added that the increased Australian demand would likely result in about one additional medium-range diesel cargo every two months, or about 300,000 barrels.

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He added that the increase in imports would take about 6 to 12 months to kick in as it would take a while to restart shuttered coal mines.

Australia imported 1,457 megalitres, or about 9.2 million barrels, of diesel in August, the highest since May, according to the latest government data.

The country imported a total of 11,601 megalitres from January to August in 2016, up from 10,872.90 megalitres over the same period last year.

The uptick comes as appetite for diesel is also growing in other major coal mining nations, with diesel used in Indonesia's mining sector estimated to have risen by 5 to 10 per cent over July-September.

The first trader said that about 30 per cent of Australia's diesel imports are used in mining, with the rest going to the transport sector.

"Diesel demand in retail is (also) good because local car manufacturers are shutting down and the cars (Australia is)importing are all mainly diesel," said another trader.

Motorists are switching from locally made, big passenger cars to overseas-made small cars and sports utility vehicles which typically use diesel, he added.

REUTERS

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