Amgio gasoil – Indian supplies weaken 500ppm premium
Dubai, 16 October (Argus) — Mideast Gulf 500ppm sulphur gasoil premiums fell by $0.15/bl to $4.45/bl as regional demand weakened even as more west coast Indian supplies hit the market. Premiums for 0.2pc sulphur and 0.5pc sulphur gasoil were supported unchanged at $3.20/bl and $3.00/bl respectively as pockets of demand emerged from Jordan and Sri Lanka. Premiums for 10ppm gasoil continued to be assessed at $5.35/bl.
Iraq's state-owned oil marketer Somo issued a tender for a total of 1.097mn t of 500ppm gasoil for delivery over January-December 2013. Somo is asking for less than in two half-year term contracts for 2012. It could be keeping open an option to issue additional term tenders. Traders Vitol, Gunvor, Litasco and Mercuria are expected to be in the running to supply the tender.
SOMO asked for a total of about 776,000t of gasoil for first half 2012. Vitol and Kuwaiti trader IPG supplied five or six 16,000-16,500t cargoes to the Khor Al Zubair terminal at Mopag +$9.67/bl on a cfr basis. Vitol agreed to supply five cargoes a month totalling about 480,000-500,000t for the second half of 2012 at the same price. IPG did not agree to the pricing and dropped out of the contract.
Bahrain's Bapco sold a prompt medium-range cargo of 500ppm gasoil loading in the second half of October from the 262,000 b/d Sitra refinery at about Mopag +$4.35/bl, lower than the Mopag +$4.60/bl at which it sold a cargo loading on 14-17 November to Dubai-based trader Gulf Petrochem. Bapco earlier sold a late-October loading cargo at slightly above $5.00/bl on a fob basis. The company had pressed for premiums above the mid-$4.00/bl level in its latest negotiations to sell spot cargoes, with a view to launching its term contract talks for 2013 from a position of strength. But it was not able to achieve its target price. The term contract talks are expected to start in November.
Indian private-sector refiner Essar Oil issued a tender to sell up to 65,000t of 0.05pc sulphur gasoil from its 400,000 b/d Vadinar refinery for 3-7 November loading. Essar's latest offer comes after it sold at least three other cargoes of 500ppm sulphur gasoil through recent spot tenders. The bulk of Essar's output until recently catered to the domestic market and augmented supplies of Indian state-owned oil marketing companies. But heavy monsoon rains have raised the country's hydroelectric power output, weakening gasoil demand for power generation. Diesel demand in India has also been hit by a continuing economic slowdown, while a fuel price hike last month has cut into buying interest.
The Essar tender is likely to draw lower bids than recent sales of 500ppm gasoil, as Saudi Arabian demand tapers off by end-October with the end of the hajj pilgrimage season. Bids for the Essar cargo are likely to range between the high-$3.00/bl to the low-$4.00/bl level.
Kenya's energy ministry plans to buy about 160,000t of 500ppm gasoil for end-November and mid-December delivery. Actual dates, exact volumes and additional requirements will be specified when the tender is issued. The Kenyan requirement was expected, with the energy ministry buying cargoes in the spot market throughout this year.
The energy ministry last bought more than 244,000t of the same gasoil grade for delivery during the second half of October and first half of November from Total, Galana Oil Kenya and Addax Kenya at premiums in a $28.60-36.40/t range to Mopag. Kenya, which along with Tanzania has been a regular buyer of gasoil through this year, competed with strong Mideast Gulf requirements during the peak summer season, keeping premiums high. Regional demand was also seen from Mozambique, where state-owned fuel importer Imopetro has a tender outstanding to buy 480,000t of gasoil for January-June 2013 delivery. The tender closes on 19 October.
A maintenance shutdown of an 80,000 b/d residue desulphurisation unit at Formosa's 540,000 b/d Mailiao refinery in Taiwan following a hydrogen leak has led to crude runs being cut to about 85pc from 95pc. The 7-10-day shutdown is expected have an impact on Formosa's November loadings of 500ppm sulphur gasoil and could result in more cargoes from private-sector Indian refiner Reliance Industries (RIL) moving to Singapore.
Cargoes moving from west coast India to Europe were mostly attributed to system transfers and contractual obligations. BP is moving winter-specification cargoes of gasoil from west coast India to the Mediterranean and northwest Europe, market participants said, although this could not be confirmed. These were thought to include a 100,000t cargo provisionally booked for loading on 10 October from the Reliance terminal in Sikka. Bank Morgan Stanley booked a 90,000t cargo on the Alegria I for loading from Sikka on 20 October, while Gunvor was trying to charter a vessel to load another 90,000t from the same terminal on 28 October, both for Europe. Brazil's state-controlled Petrobras is looking to book a vessel from Sikka to load 90,000t at the end of October for a trip to Brazil.
Demand was seen for high-sulphur gasoil from Jordan, where state-controlled refiner Jopetrol issued a tender to buy 500,000t of 0.5pc sulphur gasoil for December 2012-February 2013 delivery to Aqaba. The tender closes on 30 October. Vitol will be a major contender to supply the tender, which could attract offer levels similar to the last tender.
Trader BB Energy supplies Jopetrol with a similar amount of gasoil for September-December delivery at a $37.80/t premium to Mopag. Jopetrol bought June and August delivery gasoil cargoes totalling 500,000t at a mid-$30/t premium to Mopag on a cfr Aqaba basis.
Jordan's imports of high-sulphur gasoil and fuel oil have increased because of disruptions to supply of natural gas from Egypt as a result of attacks on a gas pipeline. The Egyptian government's recent decision to stop gas supplies to Jordan altogether as a result of increasing domestic consumption is likely to increase Jordan's demand for gasoil.
Sri Lanka's state-controlled importer Ceylon Petroleum (Ceypetco) is looking to buy both spot and term gasoil. Ceypetco sought up to 1.21mn bl of mostly 0.25pc sulphur gasoil through a semi-term tender for December 2012-May 2013 delivery to Colombo. A spot tender that closed on 16 October asked for 70,000 bl of 0.25pc sulphur gasoil for 2 November delivery. Ceypetco last bought 110,000 bl of 0.25pc sulphur gasoil through a tender from South Korea's Daewoo International at a premium of around $3.16/bl to spot Singapore quotes on a cfr Colombo basis for 21-22 October delivery.
Indian state-controlled refiner MRPL sold around 40,000t of 0.25pc sulphur gasoil through a tender at a premium of around $2.50/bl to spot Mideast Gulf quotes on a fob New Mangalore basis for 6-8 November loading. The premium is slightly lower than the Mopag +$2.75/bl it achieved for its sale of a similar volume of 0.25pc sulphur gasoil for 1-3 November loading. The Indian refiner is expected to soon issue a new spot tender for a mid-November loading cargo of gasoil.
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