US Gulf Coast products exports to Brazil displaced

OREANDA-NEWS. September 12, 2016. Refined products exports from Europe, the Mideast Gulf and India to Brazil have displaced volumes from the US Gulf coast, where relatively strong prices have prohibited arbitrage out of the region.

At least 14 cargoes of diesel, naphtha and gasoline were seen booked for early-mid September loading from Europe, the Mideast Gulf and India to Brazil. In contrast, no September-loading fixture was seen from the US Gulf to Brazil, down from at least eight in August.

Gulf coast suppliers lost their competitive edge as a supplier to Brazil when flooding and storm-related supply concerns caused spikes in refined products prices, particularly gasoline, on the Gulf. A 1.9mn bl gasoline stock draw last week on the Gulf coast pushed prices higher by 5?-6?/USG despite the region switching to higher-RVP material, which typically fetches 2?-3?/USG less than their summer counterparts.

The volatility in gasoline has prohibited exports of naphtha, which is priced at a differential to gasoline, from the US Gulf. Meanwhile, Asian refinery turnarounds have reduced the demand for naphtha there, leading sellers in India and Europe to look further to Latin America.

September-loading naphtha fixtures to Brazil include the TRF Memphis and the STI Grammercy from Europe, as well as the FSL Osaka, the STI Opera and the STI San Antonio from India.

Diesel is another popular product moving from Europe and the Mideast Gulf to Brazil, with six to eight cargoes seen fixed for early-mid September loading.

European sellers have been struggling to place increased diesel imports from the Mideast Gulf, while Gulf coast diesel producers have focused on exporting to Mexico, Carribean countries and Peru — countries where Gulf sellers have a freight advantage over European competitors.

Non-USGC origin diesel fixtures to Brazil include the Citrus Oo, the Athena M and the High Efficiency from Europe, as well as the Boraq from the Mideast Gulf. The Mercer Street and the Bright Fortune could be loading diesel from Europe for Brazil as well.

In addition, the Navig8 Success has also been booked to carry gasoline from Europe to Brazil, loading 10 September.