India Likely to be Key Gasoil Supplier to Singapore in July
One of Singapore’s largest suppliers of gasoil for July delivery is likely to be India, although import volumes from the latter are expected to fall significantly in August, according to shipping fixtures, market sources and recent price spreads between Asia and Europe.
Singapore is projected to receive delivery of around 233,300 metric tons of gasoil from India in July, a sharp increase from the 140,600 mt in June, based on data by Vortexa. This represents almost 30% of the city-state’s total gasoil imports expected in July, making India its largest gasoil supplier currently.
India may export as much as 2.47 million mt of gasoil in July, the highest since last October, which saw gasoil exports at 2.51 million mt.
However, Vortexa data showed that many shipping fixtures for cargoes loading after July 10 do not have destinations declared yet.
Of the few that have declared destinations, these are all westward of India, such as Northwest Europe and Africa, with none towards Asia, a trend which market sources agree with.
The East-West price spreads for July and August — the front month and front plus one month, respectively — have widened sharply since June 25.
The East-West Exchange of Futures for Swaps front month values averaged a discount of $79.12/mt from June 25 to July 9, compared to an average discount of $42.96/mt for June 10 to June 24, according to OPIS data. These larger discounts indicate that Northwest European prices are likely to be higher than those in Asia, and therefore more attractive to Indian sellers, who can swing their export cargoes eastward towards Asia, or westward towards Europe.
Current shipments of Indian gasoil cargoes loaded in July, which will be delivered to Singapore, were likely sold more than 10-14 days prior, when the arbitrage for larger long range 2-size Indian cargoes were still pointed towards Asia, a shipbroking source said.
Market conditions have since changed, with sentiments turning bullish in Europe while cooling in Asia. Market players expected gasoil inventories to be tight in Europe as production and plant operations fell during the ongoing heatwave, while gasoil exports from Russia were expected to be low even prior to the export ban imposed this week.
In Asia, regional supply had been forecasted to improve following the opening of the Strait of Hormuz during the ceasefire, which eased the outflow of vessels loaded with both crude and oil products. This was before the recent effective re-closure of the Strait, after the U.S. declared that the ceasefire was over on Tuesday.
China lifted export restrictions for July loading volumes on Tuesday as well, leading players to expect Chinese refiners to take the opportunity to export more.
With mid-July approaching, market players have switched to referencing the E-W EFS values for August rather than July, but the large discounts for August are still steering Indian sellers westward. The August E-W EFS value was at a discount of $97.46/mt on July 9.
Looking at recent E-W EFS values for future months to cargoes delivered in Rotterdam by March 2027, the arbitrages for LR2-size gasoil cargoes loading from the West Coast of India are all open presently, according to data provided by an analyst.
—Reporting by Kite Chong, kchong@opisnet.com; Editing by Mei-Hwen Wong, mwong@opisnet.com