India (Common Wealth) _ India’s diesel shipments to Singapore reached new highs in August, while European exports fell. According to traders and analysts, India’s diesel shipments to Singapore would reach 330,000 metric tons in August, thanks to lower freight costs and low stockpiles in the Asian oil center.
According to one ship tracker, the country’s August petroleum exports to Europe are on course to be the lowest this year, as shipments to the east are more profitable, but that situation may not remain.
The increase in Indian diesel exports to Singapore will partially compensate for decreased exports from refiners in northeast Asia, particularly China, and the greater availability will therefore restrict Asia’s robust refining profits. Lower imports from the South Asian nation, on the other hand, will help European refiners’ profitability.
According to ship tracking data from Refinitiv, Vortexa, and Kpler, India is on schedule to ship between 330,000 and 439,000 tons of diesel to Singapore in August. According to Serena Huang, Vortexa’s head of Asia-Pacific analysis, the volume is the biggest since January 2022.
Because of the seasonal dip in domestic demand for gasoline and diesel caused by the monsoon, India has increased its clean product exports for August to date, she added, referring to refined products such as diesel, jet fuel, and gasoline.
According to Sparta Commodities statistics, freight rates for the India-Singapore route were roughly $21 per ton less than the India-northwest Europe route in late July, compared to $14 a ton in mid-July, making it more profitable for sellers to transport goods east.
According to Sparta analyst James Noel-Beswick, replenishment of stockpiles in Singapore, where commercial inventories of the gasoline remain near eight-month lows, is also fueling the flows.
On prompt supply tightness, Asia gasoil refining margins have risen about $10 per barrel so far in August compared to July’s average, according to Refinitiv Eikon data. Meanwhile, according to Kpler data, India’s diesel exports to Europe in August could fall to roughly 320,000 tons, the lowest level this year.
Diesel imports into Europe are expected to dip in September since demand east of Suez has been high, and more cargoes will likely remain in the region rather than moving west, according to one European trader.
However, the increase in Indian shipments to Singapore may be short-lived if the east-west arbitrage pricing spread widens, potentially making exports to Europe more profitable again, according to FGE analyst Liu Xuanting.
The spread between front-month Singapore 10 ppm sulphur gasoil swaps and the corresponding ICE low sulphur gasoil futures contract has widened to minus $42 a ton so far in August, up from minus $31 in July, according to Refinitiv Eikon data.
Beginning in the second half of September, India’s refined product exports will be restricted as Mangalore Refinery and Petrochemicals Ltd and Reliance Industries Ltd close some facilities, including crude units, for maintenance.
In addition, an Indian refiner is expected to retain stocks on hand before the Diwali holidays in October to accommodate festive demand, according to a Singapore-based expert.
India exported around 40 million metric tons of petroleum products until November of fiscal year 2022, down from approximately 57 million metric tons the previous fiscal year. The country in South Asia is Asia’s second largest refiner, after only China. The onshore states of Rajasthan, Gujarat, and Assam produced the majority of the country’s oil. These states accounted for more than 96% of total onshore production.
The petroleum business in India dates back to 1889, when the country’s first oil resources were discovered near the town of Digboi in the state of Assam. The discovery of gas reserves in Assam and Maharashtra (Mumbai High Field) launched India’s natural gas sector in the 1960s.
