Idemitsu books rare US Gulf-Vancouver HVO cargo

Japanese oil company Idemitsu provisionally hired a medium range (MR) tanker to carry hydrotreated vegetable oil (HVO) from the US Gulf coast to Vancouver on 16 April, a sign of the growing HVO trade from the region into west coast North America.

Idemitsu put the Stolt Sisto MR on subjects for a US Gulf coast-Vancouver voyage from 20-25 April at $2.35mn lumpsum. The fixture may be part of an agreement under which Vertex Energy supplies Idemitsu's California-based subsidiary, Idemitsu Apollo, with all of its renewable diesel production from its plant in Mobile, Alabama. The plant's exports are targeting "growing regional markets in the western United States and Canada", according to Vertex.

High freight costs for US domestic shipments because of the Jones Act may be encouraging Idemitsu to focus on the Canadian market. In comparison, freight for a US-flagged MR on a New Orleans-Los Angeles voyage was equivalent to $4.34mn, nearly double the cost of a voyage to more distant Vancouver.

"I think [demand from Vancouver] will keep expanding with the subsidies/grants," a shipbroker said. "There is not much production in Vancouver, just Parkland [refinery]."

Canadian oil company Suncor typically books one MR vessel a month to carry HVO from the US Gulf coast to Vancouver, with two charters in October 2023 standing out as a particularly active month for the trade, according to ship fixtures compiled by Argus. But Idemitsu has been "jumping in on the action" in recent months, according to the shipbroker, provisionally hiring at least one MR tanker on the spot market in January and February before yesterday's deal.

Vancouver buyers are also getting HVO from Asia-Pacific suppliers, and countries like South Korea could become increasingly competitive in the renewable trade overall as they ramp up their sustainable aviation fuel (SAF) and HVO production in the coming years.

Vancouver imported around 29,500 b/d of HVO in January 2024, including 16,612 b/d from the US, 7,548 b/d from South Korea, and 5,351 b/d from Taiwan, according to Kpler data.

By Ross Griffith