India’s diesel exports to Southeast Asia are expected to reach their highest level in four years this May, with shipments climbing to 600,000 metric tons, or about 4.47 million barrels. This surge is driven by traders seeking greater profits in Asia, especially as soaring freight costs make European shipments less appealing. According to data from shiptrackers such as LSEG, Kpler, and Vortexa, these levels were last observed at the end of 2021, with the majority of exports heading toward Singapore and Malaysia.
The increased availability of diesel from India is putting downward pressure on spot premiums for the fuel in Asia and affecting derivatives markets while simultaneously tightening supply in Europe and bolstering prices there. Indian diesel headed for Europe in May is estimated at around 500,000 tons.
James Noel-Beswick, an analyst at Sparta Commodities, highlighted the dual effects of redirecting Indian diesel barrels eastward. “First, it has flooded the Singapore market, leading to a swift rebound in local inventories and applying downward pressure on diesel spreads since late April,” he noted. Furthermore, decreased supplies to Europe have led to a rise in June ICE gasoil prices.
Asian cash premiums for 10-ppm sulphur diesel fell to a seven-week low of 20 cents per barrel early this week. Refining margins, meanwhile, have struggled to stay above $16 per barrel. Data indicate that average discounts for the east-west price spread were at $22 and $20 per ton for April and May, respectively, making it more profitable for traders to sell toward the east instead of the west.
Lower shipping costs have also contributed to the boost in Indian diesel supplies to Southeast Asia. Recently, fees for chartering a medium-range vessel carrying 40,000 tons of diesel from India to Northwest Europe surged to $2.35 million, or about $59 per ton, up from $2.05 million last month. In contrast, shipping fees for a similar-sized vessel on the India-Singapore route were less than $1 million.
India’s diesel production rose in May following the restart of a crude unit at the Jamnagar refinery by Reliance Industries, enhancing export levels. Looking ahead, it is anticipated that India will export even more diesel next month as domestic demand is likely to decrease during the monsoon season. Trade sources in Singapore estimate that demand could drop by over 500,000 tons.
Original Source: https://www.firstpost.com/india/indias-may-diesel-exports-to-se-asia-hit-multi-year-high-on-higher-margins-13892993.html
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Publish Date: 2025-05-30 12:11:00
