Jakarta's move to cut diesel imports may hit margins

Previously ranked as Asia's top diesel importer, now No. 3 Indonesia is expected to take a third less of the fuel this year as demand from mining falters and biodiesel use in transport and industry grows with a mandate implemented in January.

With the government also aiming for another hike in the country's heavily subsidised fuel prices to help cap a widening current account deficit, a recovery in demand is unlikely for at least the next couple of years by most estimates.

The drop in Indonesia's imports - which cover about a third of demand - will feed a growing Asian surplus and could pull diesel margins below a more than 31/2-year low hit in June. That's going to hurt suppliers in Singapore and South Korea, who are also seeing a similar drop from buyers across the region.