Europe-Bound Jet Fuel Trade Flows Favoring Longer Cape Route over Suez
In August and September, more than half of all jet fuel shipped to Europe on the largest Long Range 2 product tankers from Asia, India and the Middle East Gulf is making the voyage via the longer and slower route around the Cape of Good Hope, OPIS analysis shows.
With the northwest Europe jet fuel market in contango, traders are using extra sailing time to arrange storage, sell the cargo or take a position on the futures market with later-priced delivery.
The evolving trend amid cheap bunkers and low freight rates signals a departure from long-established trade flows of the middle distillate to Europe via the Suez Canal. Sailing via the Cape is about 73% longer in nautical miles and adds around 10 days to the voyage.
Of the 14 LR2 tankers tracked importing some 1 million tons of jet fuel from the east of Suez Canal in August, eight of them, with 700,000 aboard, opted to go around the Cape instead, according to the OPIS Tanker Tracker.
For September, there are 11 Europe-bound LR2 tankers coming over east of Suez, with six carrying 520,000 tons going around the Cape, data compiled from brokers, traders and vessel-tracking data shows.
Analysis over the last 12 months shows the last times large tankers laden with jet fuel took the Cape voyage was in August 2015, March and February this year. Of the 158 LR2 voyages tracked in the last 12 months, 31 have gone around the Cape. Of these 31 vessels, 14 have been tracked arriving in August and September this year.