Rare Chinese diesel fixture booked for USWC

OREANDA-NEWS. July 20, 2016. A rare diesel fixture from China could boost supplies on the US West coast at a time when exports are slowing.

The Stena Imperial was seen booked to carry 40,000t of ULSD from Qinzhou, China, to the US west coast with options to Argentina. The UK-flagged vessel is currently docked at Qinzhou, according to shipping sources and vessel-tracking websites.

While jet fuel and gasoline blendstocks have moved from China to the US west coast, ULSD appears to be a rare arbitrage product between these locations. Data from the Energy Information Administration show the most recent ULSD import from China took place in September 2014.

The Chinese cargo emerged at a time when diesel exports from the west coast have slowed amid weaker prices. The return of several downed refinery units, as well as weaker Nymex futures, have pressured Los Angeles diesel to the lowest level in more than two months at \\$1.37/USG as of yesterday.

While a shift from an industrial to a consumer economy has led to a surplus of distillates in China, diesel exports have fallen below expectations in the second quarter. As a result, China has cut its third-quarter export quota for diesel by 64pc to 170,000 b/d.