India is poised to increase its diesel and jet fuel exports to Singapore and Australia in July. The expected surge in shipments, ranging from 157,000 to 224,000 barrels per day (bbl/d), is the highest since end-2021 and early 2022 and represents a 30% increase from June’s figures, according to Reuters.
The jump in middle distillates exports from swing supplier India to the Asia Pacific will likely cap prices and refiners’ margins in the region, while preventing a further build-up in inventories in Europe which have been weighing on prices there.
The volume to Australia is expected to surge to a more than two-year high of 450,000 metric tons.
The rising demand in Australia is driven by local refinery maintenance, which has led to a spike in spot cargo purchases. Additionally, government mandates to increase refined product stockpiles have amplified this demand.
Meanwhile, the sustainability of India’s exports to Singapore and Australia remains uncertain as these dynamics evolve.
India’s exports of middle distillates to Europe could hit a six-month low of 142,000 bbl/d in July, LSEG data showed.
Some analysts said that Europe’s imports from Asia have recently been curtailed by robust domestic supplies and slower than expected domestic demand.
Also, some traders diverted their cargoes to Asia after freight rates on the India-Europe route rose.
For instance, the cost of chartering a long-range (LR) tanker from India to the UK to carry 65,000 tons of diesel or jet fuel averaged at $4.7 million, or $72 per ton, from June to mid-July. The shipping cost is double what a trader could make from moving Asian products to Europe.
However, several traders said it was unclear if India’s exports to Singapore and Australia would be sustainable as the arbitrage economics for shipments to Europe has been improving after freight rates on this trade route dipped recently.
