Falling global gasoline demand has resulted in a massive oversupply of clean Medium Range tankers in European waters, with the fears of potential damage from Hurricane Florence subdued and gasoline imports into North America dropping off.
“The US arb [from NWE] is shut, we are being saved by the pull from West Africa and the Persian Gulf,” a gasoline trader on the Northwestern European market said Wednesday. “If we didn’t have this, I would be worried.”
The UK Continent-US Atlantic coast route for 37,000 mt cargoes shot up at the start of the month ahead of Florence, which has now being downgraded to a tropical storm, and peaked at Worldscale 150 a week into September but dropped w45 points as the route was assessed at w105 Tuesday.
On Wednesday, Shell was heard to have placed the Maersk Miyajima on subjects for a 37,000 mt gasoline cargo loading in Amsterdam-Rotterdam-Antwerp on September 20 for a trans-Atlantic voyage at w100 — on par with the lowest rates seen so far this year for fixtures with a clean cargo history — a level the route hit first on June 18 this year and where it was last assessed at on August 7.
“The hurricane killed demand,” one shipbroker said. “Essentially, the arbs that we would expect to be working are not, so the only cargoes we are seeing are system barrels, which is not enough to clear the masses of ships that are on the continent,” the shipbroker added.
With the gasoline arbitrage to the US Atlantic coast closed, shipowners have seen tonnage build up and rates drop dramatically over the past week and a half. Another shipbroker said there were about 35 MRs opening in the ARA region in the window until Monday, and over 50 vessels in the 10-day window.
Meanwhile, there are few cargoes heard and charterers can have their pick. Product availability is evident, with companies eager to clear out the remainder of their summer barrels and maximize the gasoline market’s backwardation.
The buying interest for North European gasoline is mostly from West Africa, with the region seemingly suffering from refinery outages. “West Africa is definitely the pull, I have WAF players constantly begging for my Catgas grades,” a trader said Tuesday.
Elsewhere, the eagerness to clear summer grade gasoline barrels combined with reduced buying momentum out of the US has in turn led to weaker blending inquiry for naphtha, one of the key blendstocks used in the production of gasoline.
Premiums of blender grade naphtha versus petrochemical cracking grades of naphtha have fallen on slow gasoline blending demand, with highly paraffinic grades pegged by one source in the high singles Wednesday, down from the high teens heard this time last week.
“It all looks fairly poor on the physical market, with lots of cargoes looking for homes, but differentials for blender grades are not quite at cracking levels yet,” a naphtha trader said.
Source: PlattsPrevious Next
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