According to industry insiders and shipping statistics, India’s diesel and jet fuel exports to Singapore and Australia are expected to reach their highest levels in two and a half years in July, as Fuel Exports move east with demand lukewarm in Europe.
The increase in middle distillates shipments from swing supplier India to Asia Pacific is expected to limit prices and refiner profits in the area, while avoiding a further build-up of stockpiles in Europe, which has been dragging on prices, according to the sources.
India, one of Asia’s biggest Fuel Exports, is likely to transport between 157,000 and 224,000 bpd of diesel and jet fuel to Singapore and Australia in July, according to estimates from LSEG, Vortexa, Kpler, and two trade sources, the highest level since the end of 2021 and early 2022. This would be around 30% greater than June.
According to LSEG Oil Research, volume to Australia is likely to reach a more than two-year high of 450,000 metric tons. BP and Vitol delivered the majority of the quantities to Australia, where they have petroleum distribution operations, while Shell shipped cargoes to Singapore, according to Kpler and LSEG data.
According to one source, planned refinery maintenance in Australia caused some local refiners to acquire more spot cargo than normal. Also, the surge in Australian imports follows a government directive to enhance refined product stocks, which went into force in July, according to two Asian refinery sources. Meanwhile, India’s middle distillate shipments to Europe are expected to reach a six-month low of 142,000 bpd in July, according to LSEG statistics.
According to some analysts, Europe’s imports from Asia have lately been reduced due to strong local supply and slower-than-expected domestic demand. According to a Singapore-based trade source, some traders transferred their shipments to Asia as freight charges on the India-Europe route increased.
From June to mid-July, the average cost of chartering a long-range (LR) tanker from India to the United Kingdom to transport 65,000 tonnes of diesel or jet fuel was $4.7 million, or $72 per ton, according to SSY Tanker statistics. The transportation expense is quadrupled by what a trader might make by transporting Asian goods to Europe.
However, other traders questioned if India’s Fuel Exports to Singapore and Australia would be sustainable, citing improved arbitrage economics for European shipments following a recent drop in freight prices on this trading route.
For July 26, shipping expenses for the India-UK route fell back to a five-month low of $3.7 million, or $57 per ton, according to SSY Tankers statistics. “This momentum could slow in the coming months as several Indian refiners enter planned maintenance this quarter, resulting in lower refinery supplies,” said Vortexa’s head of APAC analyst Serena Huang, referring to India volumes heading for Asia.
