US gasoline exports to Australia hit multiyear high in May amid Asia turnarounds
US gasoline exports to Australia in May hit their highest monthly level in more than a decade, according to the Energy Information Administration, and an S&P Global Platts analysis Monday found this occurred during major refinery turnarounds in Asia, which made countries that can supply Australia – including India, China, and Indonesia — into more aggressive buyers in the region’s spot market.
The US exported 14,000 b/d of gasoline in May to Australia, which came close to the all-time monthly high of 17,000 b/d set in December 1993, according to the EIA data. Until May, the previous January was the last time the US sent gasoline to Australia, when it took in 10,000 b/d, the data showed.
A different set of EIA data shows these exports came out of the US Gulf Coast, which sent 446,000 barrels of gasoline to Australia in May.
A USGC gasoline trader Monday said the US sends gasoline to Australia “very rarely.” Australia “is just too far away on the globe,” he said.
A US shipping source had a similar take on the situation, saying a clean tanker voyage from the USGC to Australia can occur, but only under unusual circumstances. The source said he could not be certain why this arbitrage occurred in May, but Platts shipping data shows Americas clean tanker market rates declined precipitously that month.
The USGC gasoline source said he agreed that these cheaper shipping rates would have supported the arbitrage from there to Australia, adding the arbitrage “needs other factors to help it.”
The USGC-transAtlantic route dropping Worldscale 25 points from w100 on May 1 to w75 on May 31 and the USGC-Far East route dropped a lump sum to $1 million on May 31 from $1.35 million May 1. These low rates continued into June and July, as the slow summer season and an abundance of available tonnage on the Gulf Coast plagued the clean tanker market.
Asia-Pacific market sources said the region’s supply-demand balance for gasoline tightened noticeably in May as refinery turnarounds in India stoked the country’s demand for fuel imports, further tightening supplies that could have otherwise gone to Australia.
India’s second-quarter gasoline buying was supported by refinery turnarounds at facilities including state Hindustan Petroleum Corp. Ltd.’s 7.5 million mt/year Mumbai refinery, Bharat Petroleum Corp. Ltd.’s 15.5 million mt/year Kochi refinery, Indian Oil Corp.’s 6 million mt/year Barauni refinery, as well as private refiner Reliance Industries Ltd., market sources in Asia said. India is one of Australia’s most important gasoline suppliers. In 2017, its sales of gasoline to Australia were behind only Singapore and South Korea, according to Australia government data.
Outside of India, Indonesia’s state-owned Pertamina saw its spot demand for gasoline ramp up to above the 1 million-barrel mark in May, driven by a need to fill storage tanks ahead of strong demand during the Ramadan and Eid al-Fitr holiday season. While Indonesia has sent finished gasoline to Australia in the past, it is a net gasoline importer.
Annual gasoline demand in many Muslim countries tends to peak during the Ramadan holiday season — by comparison, Pertamina’s spot purchases were seen at 600,000 barrels of gasoline in April. Thus, leading up the Ramadan holiday season, Australia saw stronger competition for gasoline supplies in the cash market.
Additionally, New Zealand’s Refining NZ at Marsden Point had a full refinery turnaround during May, with the shutdown of its crude distillation unit and other secondary units. The refinery was shut on May 4, which the company said would result in a throughput reduction of at least 500,000 barrels of refined product.
New Zealand is a net gasoline importer, which means that this refinery outage would have increased spot market competition for gasoline with Australia in May.
Platts data also reveals that two Chinese refineries were down for repair work in May, including Sinopec’s 360,000 b/d Maoming Refinery, one of the largest in the country. China is one of Australia’s top 10 sources for gasoline imports, government data from Australia shows.
Data from cFlow, Platts trade flow software, shows that two laden clean tankers left the USGC in May bound for Australia. Given that the USGC sent no diesel fuel, jet fuel or other clean tanker products to Australia in May, according to the EIA, those ships were most likely carrying gasoline, although that could not be confirmed.
On May 5, the 47,000-dwt Thelma Victory left the Port of South Louisiana, while the 49,400-dwt Stena Important left Ingleside, Texas, near Corpus Christi, on May 6, according to cFlow, with both ships bound for Gladstone, Australia.
Those ships have a combined capacity of more than 619,000 barrels, which means their collective hauls in May could have plausibly accounted for the 446,000 barrels of gasoline sent from the USGC to Australia reported in the EIA’s monthly export data.