Changing Tides Ahead for the Product Tank Market

or the new set of market fundamentals is set to have an impact on the future course of product tanker markets. In its latest weekly report, shipbroker Gibson said the long-awaited turnaround in the product tanker market due to the start-up of the 650 kbd Dangote refinery appears to be coming. The refinery imported its first crude cargo in December last year and over the past three months imports have averaged between 230 kbd and 310 kbd, mostly made up of Nigerian grades, supplemented by US barrels. The refinery also started exporting clean and dirty products in March, with volumes reaching 290 kbd in May, according to Kpler. Dirty petroleum products are finding a home mainly in the US, while some barrels have also been shipped to Europe and Singapore. The vast majority of exported oil is destined for Asia, gasoline/straight oil is staying almost entirely domestically, while jet fuel is redistributed to West/North Africa as well as Latin America, and limited volumes are sent to Northwest Europe.

Source: Gibson Shipbroker

According to Gibson, the Argus recently reported that Nigeria’s downstream regulator NMDPRA has indicated that the refinery has now received approval to start its catalytic cracking of residual liquids, which upgrades heavy feedstock into lighter products , like gasoline. Furthermore, Dangote’s vice president of oil and gas has also stated that the company expects to start selling gasoline in June and anticipates starting exports of 10 ppm oil. However, full operations may still be some time off, with exports of oil, needed as a feedstock for finished gasoline, remaining strong in May. Any major changes in these flows will provide a clue as to how quickly Dangote is bringing its secondary units online. At the moment, the general expectation is that the refinery will begin to significantly impact the clean tanker market in Q4 2024/Q1 2025, but as always there are many moving parts.

By itself, the projected decline in gasoline imports into West Africa, when Dangote is fully operational, will reduce demand not only for MR but also for larger LRs. In terms of volume, over 60% of all Nigerian petrol imports over the past two years have been in LR2 and LR1. Faced with reduced trading opportunities in the West, this will inevitably increase the availability of LR in the Middle East. While the refinery is prepared to maximize gasoline production, it will continue to produce significant volumes of oil and jets. At the moment, the products are mostly local, but Dangotes high-spec diesel and jet could find a natural home in Europe. Although it will create new clean tanker miles, many of these barrels will be a load in Europe for tankers that will continue to move product to the rest of West Africa, so essentially they won’t add much demand. for new ships. Furthermore, if we do see Dangote trading in Europe then East of Suez/Europe flows may come under downward pressure and this will have a deeper effect on the overall clean tanker market due to the distances traveled. The same logic applies to TC14 flows, the shipbroker said.

Gibson concluded his analysis by noting that the bigger issue, however, is the vulnerability of European refiners, who will struggle to find a new home for the gasoline they no longer export to Nigeria. Perhaps a little more could flow to the US Atlantic Coast, but the outlook for demand growth here is bleak. A few additional barrels can also be exported to Latin America, although here you will have to compete with Russian and American products. Already, over 600 kbd of European refining capacity is scheduled to close between 2025 and 2027. The outlook for European demand is also uncertain, but if refinery closures lead to increased European distillate intake, then there is an argument that further gains east of Suez and USG flows to Europe will offset the future decline in West African CPP imports.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

#Changing #Tides #Ahead #Product #Tank #Market
Image Source :

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top