Vortexa’s head of APAC analysis, Serena Huang said, “This trade flow was mainly attributed to the opened arbitrage for India-origin cargoes to head West, with traders potentially preparing for the loss of Russian diesel barrels to Turkey as well due to the export ban.”
To stabilize the fundamentals of its internal market, Russia restricted diesel exports on September 21. However, this prohibition was partially reversed as reported on October 6.
Increased exports of diesel from India to Europe will aid with the continent’s commercial stockpiling ahead of the winter heating season, alleviating concerns about a supply shortage and limiting inflation overall. To counteract a slight supply excess in the region, the westward pull for cargoes will continue to sustain Asian refining cracks or margins.
In accordance with shiptracking data from Vortexa, Kpler, and LSEG, India exported between 280,000 and 303,000 barrels per day (BPD) of diesel to Europe in September, accounting for half of the country’s overall diesel exports for the month.
On the contrary, exports to Singapore dropped by around 73% month over month in September as cargoes headed west were more profitable for sellers. According to LSEG statistics, the east-west arbitrage, which is normally calculated using the spread between the prices of ICE gasoil futures and Asia’s immediate month gasoil swaps, averaged $76 per ton per day in the second half of September.
According to one Singapore-based trading source, a decline in India’s windfall export tax during a substantial part of September encouraged refiners to sell their cargo abroad.
A second Singapore-based trading source stated that this is in addition to the rising cash premiums for exports of India, with transactions for September cargoes at premiums of roughly $4 per barrel compared with August premiums at $2 to $3.
Vortexa’s Huang stated, “However, the arbitrage spreads have narrowed in the past week, so the flows will slow in October.”
According to LSEG statistics, the EFS spreads dropped from a week earlier by over $20 per ton. According to Kpler shiptracking data, October shipments from India headed for Europe are currently around 75,000 barrels per day, or about a quarter of September levels.
Due to a number of variables, such as continuing refinery turnarounds and high demand over the Diwali festive season, exports from India are anticipated to remain low in October, as reported by LSEG analysts.
- Published By Team Genuine Reporter