Brazil looks to floating storage near Togo for diesel

East coast South American fuel importers are purchasing Indian diesel from floating storage inventories sitting near the west African country of Togo amid limited available volumes from the US Gulf, the traditional supplier to the region.

Vessel tracking shows three tankers with 1.35mn bl of diesel originally from Sikka, India, that are steaming toward Brazil and Argentina after they received the cargoes via ship-to-ship (STS) transfer off the west African coast.

The abundant floating storage inventories and geographic proximity of west Africa to Brazil makes the region a strong candidate from which to purchase fuel. At 15 knots, the journey from Lome, Togo, to Santos, Brazil, is 9-10 days, compared with the 15-16 day journey from Houston, the key refined product export point in the US.

Refined product floating storage is common off the west African coast because port facilities in Nigeria and other countries in the region cannot accommodate direct discharges of large cargoes, said a shipbroker. The region relies on shuttle tankers conducting STS operations for imports.

Traders are capitalizing on the region's floating inventories to ship fuel to relatively nearby Brazil, where steep refined fuel price hikes have widened the arbitrage for foreign product.

Brazil's fuel supply continues to be limited from refineries in the US, which supplied Brazil with 82pc of its diesel imports in 2020, according to Brazil's ministry of economy, because weak refining margins are slowing the rebound in US utilization. US refinery utilization was 84pc for the week ending 2 April, significantly up from an all-time low of 56pc in the week ending 26 February following the Texas power outages, but below pre-Covid levels of around 90pc, according to data from the US Energy Information Administration.

Of the three Brazil-bound tankers loaded with Indian diesel, the EBN Hawkel loaded 598,000 bl from the 2021-built Kanaris 21 Suezmax near Lome and is expected to arrive in Itaqui, Brazil, on 11 April, according to Vortexa.

The Torm Titan is carrying 213,000 bl that it loaded from the 2021-built Diodorus VLCC, also near Lome, and is expected to reach Santos on 17 April.

The Cordula Jacob is carrying 535,000 bl of diesel that it loaded from 2020-built Babylon VLCC, sitting near Lome, and is expected to arrive in Argentina on 20 April.

All three cargoes originated in Sikka, India, according to vessel tracking. The Kanaris 21 loaded there directly on 25 February, while the Diodorus and Babylon received the India-originated cargoes from other tankers via STS. The Babylon is on a 4-6 month charter to energy trader Trafigura from February, after the trader previously used the tanker as a floating fuel trading hub near the Bahamas from September 2020 to February 2021.

Brazil's March imports of Indian diesel hit high

Some Asia-originated diesel cargoes drawn from floating storage inventories near Togo have already reached South American shores this year.

Indian diesel exports to Brazil already reached a one-year high of 142,100m³ (28,830 b/d) in March, nearly triple February's figures, according to Brazil's ministry of economy.

Cargoes from the Ypaparti and the 2020-built Hunter Disen, both operating recently as floating storage, arrived in Brazil aboard other vessels on 9 March and 22 March, respectively, following STS transfers.

Like the cargoes en route to South America's east coast, the cargo from the Ypaparti was from Sikka, India. The diesel cargoes that landed in Brazil via the Hunter Disen were from Nakhodka on Russia's east coast and Yosu, South Korea.

By Nicholas Watt