Germany reliant on diesel imports as output limited

Demand for imported diesel in Germany has risen, and the conflict between Israel and Hamas led to a recent peak in traded heating oil spot volumes.

Traders in northern Germany report that import demand is improving, with increased need from the south because production has been greatly reduced at the 207,000 b/d Bayernoil refinery since a fire on 6 October. More diesel is being sent by rail from Hamburg to southern locations.

Despite an uptick in arrivals to northern Germany, imports along the Rhine river are more profitable, as reflected in the recent $15/t price premium of cif Hamburg diesel to fob barge prices. Import margins from ARA to locations along the Rhine increased by $24/t, to $36.5/t, on the month in October to date.

Demand for transporting gasoil and gasoline by barge increased significantly in October, according to German shipping operators. Both Miro's 299,000 b/d Karlsruhe and BP's 257,000 b/d Gelsenkirchen refineries are in part being supplied with product by barge due to maintenance work. In addition, there are more enquiries for gasoil imports into Switzerland and purchases from traders in Germany ahead of the heating season. This comes at a time when Rhine water levels continue to be very low and barge loadings are restricted to less than 40pc of capacity.

Traded heating oil volumes in Germany rose in the first two days of last week to the highest since July 2022, with the start of the conflict between Israel and Hamas leading to a price rise. But reported volumes have been falling since 11 October, as heating oil prices kept rising and it is likely consumers will not need as much additional stocks for the upcoming winter. According to data from Argus MDX, private heating oil stock levels increased slightly year on year and are around 60pc of capacity.

Some traders expect demand for imports into Germany could increase further in November, when winter diesel demand could exceed domestic production capacities. However, it is unclear from where Germany can source the required amounts. The coming winter is the first in which Germany will be unable to obtain diesel with German winter specification from Russia. If low water levels on the Rhine and production issues in the south persist, this could significantly complicate the sufficient supply of certain regions in Germany and hence increase the reliance on cargo imports.

By Johannes Guhlke