Diesel Market Dynamics, Analysis, and Forecast Report (Recent Commodity Market Intelligence)

I. Market Dynamics Intelligence

Price Trends
- Recent Price Volatility: Since May 2026, diesel prices have exhibited volatility. According to Shengyishe (Business Society) data, the benchmark diesel price stood at RMB 7,341.43 per metric ton on May 1; by May 25, the spot reference price for 0# National VI diesel in Shandong Province had adjusted to RMB 7,326.14 per metric ton—a 0.43% increase from the previous day.
- Price Adjustment Updates: Effective 24:00 on May 21, 2026, domestic refined oil prices were raised nationwide. In Guangdong Province, gasoline and diesel prices increased by RMB 75 and RMB 70 per metric ton, respectively.
- Enterprise Quotation Dynamics: Diesel quotations varied significantly across enterprises as of May 21: Shandong Lihua Yi Group Co., Ltd. quoted RMB 7,050/ton for 0# diesel; Shandong Jingbo Petrochemical Co., Ltd. quoted RMB 7,362/ton; Shandong Dongming Petrochemical Group Co., Ltd. quoted RMB 7,900/ton; Shandong Huifeng Petrochemical Co., Ltd. quoted RMB 7,250/ton; Shandong Shenchí Holding Co., Ltd. quoted RMB 7,060/ton; and Sinochem Hongrun Petrochemical Co., Ltd. quoted RMB 7,275/ton.

Supply-Demand Situation
- Supply Side: Domestic diesel supply remains generally ample. Refinery operating rates are sustained at high levels. Central state-owned enterprises (SOEs), leveraging integrated refining-and-chemical advantages, dominate core supply, while regional independent refiners and large private refineries complement supply through localized deployment and cost competitiveness. However, since May, multiple enterprises—including Shandong Huifeng Petrochemical Group and Shandong Lihua Yi Group—have repeatedly lowered their fuel quotations, indicating potential inventory pressure or intensifying competitive dynamics on the supply side.
- Demand Side: Diesel consumption spans multiple sectors and is closely tied to macroeconomic conditions and industrial structure. Vehicle-use diesel constitutes the primary consumption segment, with demand driven by commercial vehicle sales volume and fleet size. In Q1 2026, LNG-powered heavy-duty truck sales surged substantially, exerting some competitive pressure on diesel-powered heavy trucks. Nevertheless, the projected growth in freight turnover volume is expected to sustain transportation demand, supporting positive growth in diesel-powered vehicle fleets—and thus bolstering vehicle-use diesel consumption. In agriculture, diesel engine power output remains stable, but agricultural vehicle fleet size continues declining, keeping agricultural diesel consumption flat. Marine diesel use is anticipated to grow modestly, whereas rail transport diesel consumption declines steadily due to ongoing railway electrification; construction and mining diesel demand also faces downward pressure.

Related Market Factors
- International Crude Oil Market: Fluctuations in international crude oil prices significantly influence the domestic diesel market. Since late April, international crude oil futures prices have risen sharply—for example, surging nearly 7% on April 29—driving upward adjustments in domestic refined oil prices. Higher crude oil prices increase refining costs, thereby providing price support for diesel.
- Alternative Energy Markets: The rapid expansion of natural gas-powered heavy-duty trucks poses a challenge to the diesel market. In March 2026, natural gas commercial vehicle sales reached 35,000 units—up 170% month-on-month and 21.1% year-on-year. Cumulative sales for Q1 totaled 71,000 units, representing a 9.2% year-on-year increase—the fastest-growing subsegment within the heavy-duty truck market. Under persistently widening oil–gas price spreads, LNG trucks are accelerating structural transformation in the heavy-duty truck sector, diverting demand away from diesel-powered heavy trucks.

II. Analytical Assessment

Short-Term Analysis
- Price Outlook: In the near term, diesel prices are likely to remain volatile. On one hand, uncertainty surrounding international crude oil prices persists—if crude prices continue rising, elevated refining costs will provide upward price support. On the other hand, abundant domestic diesel supply, intense inter-enterprise competition, and the dampening effect of alternative energy sources (e.g., LNG trucks) may constrain further price increases.
- Supply-Demand Outlook: On the supply side, refinery operating rates are expected to remain high, sustaining ample diesel supply. On the demand side, improving macroeconomic fundamentals and rising freight turnover volumes will support growth in diesel-powered vehicle fleets—positively impacting vehicle-use diesel consumption. Yet the substitution effect from LNG trucks, along with declining diesel demand in rail transport, construction, and mining sectors, will temper overall demand growth.

Long-Term Analysis
- Market Size: Globally, the diesel market is projected to expand steadily over the long term. According to in-depth research by Wenke Hui (WENKH), the global diesel market size reached RMB 893.37 billion in 2026 and is forecast to grow at a compound annual growth rate (CAGR) of 4.75%, reaching RMB 1,236.26 billion by 2033. Logistics freight and heavy industry demand constitute the core drivers of this expansion. Stable operational performance in downstream industries and a decelerated adoption pace of alternative energy sources will help consolidate diesel’s dominant position in core end-user segments.
- Competitive Landscape: The domestic diesel market features an SOE-led, private-sector-complemented structure characterized by high concentration. Leading central SOEs control core supply and terminal distribution channels via integrated refining-and-chemical operations, extensive retail networks, and upstream resource advantages. Regional independent and large private refiners supplement supply through geographical proximity and cost efficiency. Looking ahead, the industry will transition toward cleaner, larger-scale production. Industry leaders will drive standards upgrades and capacity optimization, while smaller players may exit the market or pivot toward niche or alternative businesses—further solidifying market hierarchy under policy guidance and capacity restructuring.

III. Forecasts

Price Forecast
- Over the next month, diesel prices are likely to fluctuate narrowly around current levels, with limited upside or downside potential. Should international crude oil prices remain stable or rise modestly, diesel prices may follow suit with slight upward movement. Conversely, a sharp decline in crude prices could drag diesel prices lower.
- Long-term, diesel demand is expected to grow gradually amid global economic recovery and logistics sector expansion. However, energy transition and proliferation of alternative fuels will moderate growth momentum. Diesel prices are projected to trend upward moderately—but the pace will be tempered by multifaceted influences including production costs, supply-demand balance, and regulatory policies.

Supply-Demand Forecast
- Supply Outlook: Domestic refineries will maintain high operating rates, ensuring continued abundance of diesel supply. Advancements in refining technologies and continuous optimization of production capacity will also elevate diesel quality standards.
- Demand Outlook: Vehicle-use diesel demand will rise steadily alongside increasing freight turnover volume; however, the penetration of LNG trucks and other alternatives will moderate its growth rate. Agricultural and marine diesel demand will remain stable, whereas demand from rail transport, construction, and mining sectors is likely to decline further. Overall, diesel demand is expected to grow slowly but steadily.

Market Trend Forecast
- Accelerated Energy Transition: Growing global emphasis on environmental protection and sustainable development will accelerate energy transition. As a conventional fossil fuel, diesel faces mounting environmental regulation and intensified competition from alternative energy sources. Moving forward, the diesel market will progressively shift toward cleaner, lower-carbon solutions—market shares of ultra-low-sulfur diesel and biodiesel are expected to rise incrementally.
- Intensified Industry Competition: Domestic diesel market competition remains fierce. Leading enterprises will strengthen competitiveness through technological innovation, scale expansion, and vertical integration. Smaller manufacturers will confront heightened survival pressures. Industry consolidation and merger-and-acquisition activity are likely to intensify, further elevating market concentration.
- Increasing Policy Influence: Government oversight and policy guidance in energy markets will exert greater influence on the diesel sector. Future policies may include stricter environmental standards and energy regulations, promoting clean transformation and sustainable development of the diesel market. Concurrently, supportive government policies for new-energy vehicles and alternative fuels will exert a moderating influence on diesel demand.