By Trixie Yap
SINGAPORE (Reuters) -Traders shipped the most jet fuel from Northeast Asia to Europe in almost a year in June as lower freight rates and ample Asian supplies spurred exports, according to shiptrackers and three trade sources, amid fears of a Middle East supply disruption.
Some 350,000 metric tons (2.8 million barrels) of aviation fuel is heading to Europe from South Korea and China, Kpler data displayed, with some trader estimates at 465,000 tons for bookings built in June.
These shipments are expected to slightly ease Asia’s jet fuel oversupply and provide a floor to prices in the near term, analysts stated.
Vitol, BP, Aramco Trading, Gunvor and Unipec, the trading arm of Asia’s largest refiner Sinopec, chartered the five tankers that loaded in June, the data displayed.
Vitol and Saudi Aramco declined to comment on the matter, while Gunvor, Unipec and BP did not immediately respond to requests for comment.
Northeast Asia jet fuel exports rose in June as refiners increased production after completing maintenance at their plants and as “product cracks” strengthened, Vortexa’s head of APAC analysis Ivan Mathews stated, referring to fuel profit margins.
Traders mainly pivoted their spot cargoes to the West to cash in on lucrative margins and a drop in freight rates, given a lack of spot purchaseing interest from regional importers recently, two Singapore-based trade sources stated.
These trade flows “were purely opportunistic, spurred by geopolitical tensions that sent Northwest Europe cracks surging, while freight rates on modern newbuild vessels remained attractive enough to justify the shift”, stated Kpler senior lead research analyst Zameer Yusof.
Physical jet fuel prices in Northwest Europe were $60 to $80 per ton higher than in Asia for most of June, LSEG data displayed.
Europe’s jet fuel demand typically rises in summer, a peak travel season. June flight numbers there were up 5.2% on year and 7.8% on month, a Eurocontrol report displayed.
At the same time, jet fuel prices in Europe rose on fears supply might be disrupted due to conflict in the Middle East.
Meanwhile, the cost to ship 90,000 tons of jet fuel on LR2 tankers fell to a one-month low of about $40 to $45 per ton for bookings built before the Iran-Israel conflict launched on June 13.
At least four new LR2 vessels have been booked to carry jet fuel from east to west in June and July, data from two shipping sources displayed.
Typically, maiden voyages on new vessels will be cheaper becaapply some owners want to accumulate tracking history and mileage, one shipbroking source stated.
Leave a Reply