Indian alkylate flows to NY Harbor slow

Alkylate flows from India's Reliance refinery to New York Harbor have steadily shrunk since July amid weak prices, excess supply and thin blending margins for winter RBOB, but the US west coast is taking more deliveries.

The New York Harbor market — the traditional US destination for Reliance alkylate cargoes — has had less appetite for the high-octane gasoline blendstock over the past few months. A monthly average of 510,000 bl of alkylate has moved from Reliance's Jamnagar refining complex to New York Harbor since August, compared with 1.8mn bl shipped in July and 2.7mn bl shipped in June, Vortexa data show.

New York Harbor has been less thirsty for Reliance-grade alkylate as the Covid-19 pandemic pinched demand for premium gasoline, cutting prices and squeezing the octane spread.

Premium RBOB averaged 11.3¢/USG over regular RBOB during 1-20 October in the New York Harbor barge market, less than half the 24.2¢/USG differential during the same period in 2019. Premium RBOB offers trended lower last week amid declines in the Gulf coast market and market backwardation — with prompt prices trading higher than forward values. That cut the premium/regular RBOB spread last week to 7.93¢/USG, the narrowest since December 2017.

Meanwhile, alkylate prices fell to 4.25¢/USG over November Nymex yesterday, the lowest since late August.

While alkylate was never short in the New York Harbor this spring and summer, periodic shortages of other blending components such as naphtha hindered RBOB blending and contributed to excess alkylate being sent to storage during the summer. Suppliers were already heard to be putting excess alkylate in storage in April, with plans to remain stored until summer 2021 when a steep decline in prompt Nymex RBOB futures resulted in a deep contango, making RBOB futures into next year sharply higher than prompt prices. However, the contango from October into May 2021 has since narrowed to just above 13¢/USG, only slightly wider than the same time last year, reducing incentives to store inventory until the summer.

The seasonal RVP transition into winter has also contributed to anemic demand for alkylate in New York Harbor, at a time when higher RVP blendstocks such as butane comprise a larger portion of the RBOB blend pool.

Also contributing to the slowdown in alkylate flows from Reliance was the maintenance shutdown of one of four crude units at Jamnagar's 1.36mn b/d refining complex in late July and August. It takes about a month for a cargo to reach New York Harbor from Sikka, India.

More for the west coast

As flows to New York Harbor have slowed, more Reliance alkylate has been shipped to the US west coast

The Atlantic Harmony is expected to offload around 300,000 bl of alkylate in Martinez, California, near the end of this month after loading from Sikka on 21 September, according to Vortexa. The Trent offloaded around 130,000 bl of alkylate at Martinez in mid-September. Up to 1.27mn bl of Indian alkylate has moved to the US west coast so far this year, compared to 650,000 bl in all of 2019 and none before that, Vortexa data show.

The US west coast is not a typical importer of gasoline or blending components. West coast inventories also remain well above prior year levels, in contrast with the New York Harbor market, where inventories have dipped below year-ago levels. Reliance alkylate finding its way further west has been a function of the push away from the New York Harbor market rather than pull from the west coast.

By Chunzi Xu and Stephanie Crawford