U.S.-Europe Diesel Arb Seen Reopening
The arbitrage to ship ultra-low-sulfur diesel from the U.S. to Europe for sale at a profit appears to have reopened after nearly two months of being closed, with 18 ships now sailing to the region and a further nine chartered to load from gulf refineries over the next two weeks.
The U.S. is the second-largest exporter of ULSD to Europe after Russia, but shipments slowed to a trickle in November and October as high diesel prices in the U.S. made it uneconomic to send vessels across the Atlantic.
But with 18 Europe-bound tankers now seen on the water heading from the U.S. and an additional nine chartered to load from the gulf over the next two weeks, monthly volumes to the continent are sharply climbing.
December arrivals of ULSD to northwest Europe, the U.K. and ports in the Mediterranean are tallied at 1.1 million metric tons on 26 tankers, according to the OPIS Tanker Tracker on FleetMon.com. An additional 512,000 tons is scheduled to arrive in January, according to information compiled from brokers, traders, market intelligence and ship-tracking data.
Not all fixtures are reported to the market, and some vessel loadings may be canceled. The tracker assumes all clean petroleum product cargoes to be ULSD, unless specified, in assessing volumes.
The profit to ship ULSD from the U.S. Gulf to northwest Europe is seen at $1.81 per metric ton, according to data compiled by OPIS. That's based on the U.S. Gulf FOB price at $536.79 per ton at 4:30 p.m. London time, with freight costs adding an additional $32.
The CIF sales value in Europe is at $570.60 per ton, OPIS calculates, providing the indicative arbitrage.
The OPIS Tanker Tracker compiles information from traders and brokers, and FleetMon ship tracking to provide a real-time insight into Europe-bound refined products on tankers. Pinpoint detailed shipping information, such as vessel, product and volume being transported, and buying or selling party and gain critical intelligence on the movement of product from port to port. Learn more and take advantage of a 21-day, no-obligation free trial.