SOURCE: BLOOMBERG
Shipments of diesel from India into Europe are at the lowest since 2022 so far this month as Houthi attacks on merchant shipping continue to disrupt international trade, driving more cargoes to Asia. Flows to the European Union and UK plunged as higher freight costs stoked by the ongoing turmoil in the Red Sea, as well as unplanned refinery maintenance in Asia, made trade economics better for sending cargoes east rather than west.
Arrivals of fuel from India into Europe averaged just 18,000 barrels a day in the first two weeks of February, a plunge of more than 90% compared with January’s average, according to data from Vortexa Ltd., compiled by Bloomberg. The drop partly stemmed from the higher costs of shipping to the west last month, according to James Noel-Beswick, an analyst at Sparta Commodities.
“The economics to export east – Singapore region – were a lot better than those west,” Noel-Beswick said. Tankers heading to Europe or the Atlantic Basin are being forced by the Houthi threat to go around South Africa’s Cape of Good Hope, increasing journey lengths and costs, or use the Suez Canal, “with the risks involved and extremely high war risk insurance.”
There were no imports of diesel-type fuel into the EU in the first two weeks of February and only one shipment into the UK, according to the data. However, the Marlin Sicily and Marlin La Plata recently loaded barrels in India and are headed for Rotterdam, with the former signaling arrival later this month, according to port report and tanker-tracking data compiled by Bloomberg.
Elsewhere, arrivals of diesel-type fuel from India to Asian destinations – including some cargoes into Saudi Arabia and Bangladesh – surged in the first two weeks of the month. More cargoes, on vessels such as the Peace Victoria and Orange Victoria, are sailing toward East Asia.
Better arbitrage economics should mean an increase in exports of diesel from India to the European region in the coming weeks, Noel-Beswick said.