In Freight News 17/02/2015
CIF delivered Mediterranean physical 0.1% cash gasoil cargoes were at their narrowest discount in 15 months to 10 ppm diesel cargoes and the narrowest discount to front-month ICE gasoil futures contract this year following prompt-demand for cargoes in the region.
The sulfur spread, or difference between the CIF delivered ultra low sulfur diesel and 0.1% gasoil, closed at $8.50/mt on Friday, the narrowest since November 11, 2013.
The CIF Mediterranean 0.1% gasoil cargo price was assessed at $582.25/mt on Friday, and $1.75/mt lower than the front-month March ICE low sulfur gasoil futures contract, the narrowest discount since the ICE contract started at the beginning of the year, Platts data show.
Mediterranean gasoil cargoes also closed sharply above the Northwest European cargoes at $5.75/mt on Friday, the highest premium since November 4 last year.
Spain, Greece, and Slovenia are among the destinations where recent gasoil cargoes have been sailing to, with strong heating oil demand and some storage demand driving the strength in the market, according to market sources.
BP and Litasco have purchased a significant amount of volume throughout the month with their cargo purchases totaling approximately 210,000 mt so far this month in the Platts Market on Close.
Vitol has been the primary source of spot gasoil cargoes in the region and has sold cargoes to both companies.
“There’s been some demand for 0.1%. There was good demand in France and Spain. Greece has imported a lot and there’s been pockets of demand in the Adriatic and for DMA,” a trader said. “It’s normal demand for winter, but it’s true that it started a lot later than usual. We saw nothing in November and December.”
Demand for DMA specification marine gasoil has been noticeable in the market following the new European sulfur Emission Control Area which came into effect at the beginning of the year in Northwest Europe.
According to market sources, one trader has been actively buying 10,000-20,000 mt cargoes of DMA specification cargoes on a weekly basis, with sources saying the cargoes either end up in Malta and Barcelona to be blended further.
However, some sources say that the gasoil purchased for DMA tends to be of higher density than material supplied for heating oil, which typically originate from the Black Sea, and is instead sourced from French and Spanish refineries.
“DMA barrels are heavy while most of the Black Sea barrels are light… but you could blend some of the lighter barrels from the Black Sea,” the trader said.
On the supply side, most of the heating oil barrels have come from Cyprus, after VTTI’s new terminal opened late last year.
The terminal has played an increasingly important role in the supply of gasoil to the Mediterranean, replacing the traditional supply stream of gasoils from the Black Sea which make their way straight to the terminal for blending before they are re-exported to their final destinations.
The terminal was closed for the last several weeks following damage to the jetty.
Operations have now returned to normal according to a spokesperson at the terminal with the terminal expected to reach 80% of its 544,000 cubic meter capacity.
Source: Platts