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Asian gasoil market bullish amid emerging Indian demand

Sentiment in the Asian gasoil market was buoyant after India’s Hindustan Petroleum Corp. Ltd. — a regular supplier of the middle distillate — sought to buy, in a rare move, up to 1.095 million mt of 45 ppm sulfur high speed diesel through two term tenders.

The first tender was for seven lots, with each cargo comprising of 65,000 mt, for delivery to Mundra over May-November. In the same tender, the refinery has put in an option to purchase an additional six cargoes on the same terms and conditions during the contract period.

In a separate tender, HPCL is looking to purchase 8-13 65,000-80,000-mt cargoes of the same grade, slated for delivery to Visakhapatnam over April-November, with an option to increase the purchase by another 290,000 mt over the term contract.

Both tenders will close on March 21, with validity until March 22.

“It will sure help [the market]. It is 45 ppm sulfur gasoil grade that they are seeking, which could all be just 10 ppm [sulfur gasoil] that is delivered to them,” a source said.

While the exact reason for the import was not known, several sources pointed towards the upcoming shutdowns.

“It’s hard to say [what is driving their term purchase this time round] … they have a few refineries down and they have been importing gasoil,” a Singapore-based trader said Tuesday, in reference to HPCL’s previous spot tenders to buy gasoil for delivery into Visakhapatnam and Mundra.

“They have also been taking [gasoil] from others, domestically, so maybe they are being cautious,” the trader added.

The refiner earlier sought four 45 ppm sulfur high speed diesel cargoes, totaling 230,000 mt, for February delivery into several destinations, including Mumbai, Visakhapatnam and Mundra.

Other industry sources agreed, saying that HPCL has a planned turnaround in July.

“They have a scheduled maintenance starting July 15, for 30 days … India is going through quite a bit of turnarounds and upgrades this year, in general. So, all the refiners are upgrading to 10 ppm,” a source said, adding that heavier-than-usual maintenance scheduled for the coming months could affect domestic refinery outflows.

S&P Global Platts previously reported that the state-owned refiner had put on hold a planned maintenance shutdown of a crude distillation unit at its Mumbai refinery, initially scheduled during the January-March quarter.

The 7-10 day shutdown had been proposed to carry out an interlinking process at the 4 million mt/year capacity crude unit. Instead, the refinery will undertake the short duration CDU shutdown simultaneously with a revamp planned next quarter. The company plans to revamp its motor spirit block for 35-45 days.

Further out, HPCL has maintenance plans for its Vizag refinery, for secondary units as well as the three CDUs, for 3-4 weeks in July-September.

Unlike gasoil, industry sources said that there were no term requirements for co-distillate jet fuel, citing “business-as-usual” on the export front.

Furthermore, barrels loading from India and the Middle East have started to move to the Far East amid seasonally poor demand in Europe, they added.

The forward market appeared to be supporting this view. S&P Global Platts assessed the Q2/Q3 time spread down 34 cents/b day on day at minus $1.10/b Monday.

This was also seen in recent fixtures where Vitol took the Pro Sapphire to load 30,000 mt of jet from Paradip to Singapore on March 27.

Shipping sources said that charterers had also begun to add East/West port discharge options when loading jet from India. Trafigura, for example, chartered Energy Centurion to load 60,000 mt of jet from Vadinar on March 21, with options to discharge either in Singapore or the UK-Continent.
Source: Platts

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