Diesel shipment to Asia diverts to Turkey as eastern markets slacken
A cargo of ultra low sulfur diesel destined for the East of Suez market — one of a number of Long Range 2 vessels engaged in an atypical arbitrage from Northwest Europe to Asia in the last few weeks — is now set to discharge into Turkey, in a sign the Asian gasoil market could be weakening.
The LR2 tanker Front Antares had been widely reported to be going to either West Coast India or Singapore, but, after loading in Rotterdam Sunday, is now steaming towards to the Sea of Marmara, according to data from S&P Global Platts trade flow software cFlow.
So far only one vessel has loaded 10 ppm ULSD in the Amsterdam-Rotterdam-Antwerp refining and storage hub and subsequently discharged in the East, with the STI Kingsway unloading into the storage facility of Fujairah in the United Arab Emirates last week.
This product would still likely feed into the Indian market, sources said, adding that storage in the Persian Gulf prior to delivery was more economical.
Another vessel, the Nin Lin Wan, heard fixed by BP, is awaiting loading at Vopak’s Europoort terminal in Rotterdam before departing for the East.
The rare reverse arbitrage has only been possible for some as a result of a particularly strong Asian market which saw the balance-month Exchange of futures for Swaps — the difference between ICE gasoil futures and 500 ppm FOB Singapore swaps — hit a more than two-year high at the beginning of July.
However, recently the market has been on the wane, with India, the instigator of much of the recent strength, seeing refineries come back from maintenance and upgrades and the beginning of the monsoon season which usually reduces demand for gasoil.
Meanwhile, the East Mediterranean market has tightened over the course of the week, which may have encouraged Front Antares to stop short of the Suez canal.
The already tight Med gasoil market saw differentials reach a two-month high Thursday with Greece’s Hellenic Petroleum heard tendering for around 30,000 mt of 10 ppm product after the company halted “a number of units” at its 100,000 b/d Elefsis refinery following an incident at the hydrogen unit.