Due to lower freight costs and low inventory levels in the Asian oil hub, India’s diesel shipments to Singapore are expected to reach a 19-month high in August and surpass 330,000 metric tonnes, according to traders and experts.
On the other hand, while shipments to the east are more profitable, the nation’s petroleum exports to Europe for August are anticipated to drop to their lowest levels this year, according to one ship tracker, although that condition may not persist.
As a result of the increase in Indian diesel exports to Singapore, which will partially offset the decline in exports from refiners in northeast Asia, particularly China, the region’s high refining margins will be capped. In contrast, the decrease in imports from the South Asian country will help to strengthen the margins of European refiners.
According to shiptracking data from Refinitiv, Vortexa, and Kpler, India is on schedule to send Singapore between 330,000 and 439,000 tonnes of diesel in August.
Serena Huang, the head of Asia-Pacific analysis at Vortexa, said that the volume is at its highest level since January 2022.
“The seasonal lull in India’s gasoline and diesel domestic demand due to the monsoon has seen the country raising its clean product exports for August to date,” she said, referring to refined products such as diesel, jet fuel, and gasoline.
According to statistics from Sparta Commodities, freight rates for the India-Singapore route were around $21 per tonne less expensive than those for the India-northwest Europe route in July, down from $14 per tonne in mid-July, making it more profitable for sellers to transport cargoes east.
According to Sparta analyst James Noel-Beswick, replenishment of stockpiles in Singapore, where commercial gasoline inventories are still close to eight-month lows, is another factor driving the flows. [O/SING1]
As a result of an immediate supply shortage, Refinitiv Eikon data indicated that Asia’s gasoil refining margins had increased by over $10 per barrel so far in August compared to July’s average.
According to Kpler statistics, India’s diesel shipments to Europe in August may reach their lowest level this year of about 320,000 tonnes.
Because of the increased demand east of Suez and the likelihood that more cargoes would stay in the area rather than go west, diesel imports into Europe are predicted to decline in September.
The increase in India’s exports to Singapore, however, could not last long given the expanding east-west arbitrage pricing differential, which might make exports to Europe once again lucrative, according to FGE analyst Liu Xuanting.
The difference between the related ICE low sulfur gasoil futures contract and front-month Singapore 10 ppm sulfur gasoil swaps has increased to an average of minus $42 per tonne so far in August from an average of minus $31 in July, according to Refinitiv Eikon data.
Additionally, as several facilities, notably crude units, were shut down by Mangalore Refinery and Petrochemicals Ltd. and Reliance Industries Ltd. for maintenance, India’s exports of refined products will be reduced starting in the second half of September.
In order to fulfill holiday demand, Indian refiners may hold supplies before the Diwali vacations in October, according to a Singapore-based expert.
