SINGAPORE: SA’s Engen is set to export a gas-oil cargo to Singapore, according to trade sources and shipping data. The company has provisionally booked the Torm Horizon to transport 35,000 tons of gas-oil to Singapore from Durban, shipping fixtures showed.
The cargo likely comprises high sulphur gas-oil whose premium has risen to a more than three-month high this month due to prompt demand in Southeast Asia, four traders and ship-brokers said.
SA is exporting 500 parts-per-million (ppm) sulphur gas-oil and importing the lower sulphur grades, a Singapore-based middle distillates trader said, declining to be identified as he was not authorised to speak with the media. SA consumes diesel with 10ppm sulphur in its domestic market, he added.
A refinery typically exports high sulphur gas-oil when a secondary unit is under maintenance and is unable to process the fuel to make low sulphur diesel, traders said.
The price spread between diesel with 10ppm sulphur and 500ppm sulphur gas-oil narrowed to 5c a barrel in late November, its tightest in more than three years, before widening slightly this year, Reuters data shows. The gap between the two grades narrowed due to a flood of supply of low sulphur diesel from China, while Southeast Asian countries are still consuming the higher sulphur grade, traders said.
This, in turn, is pulling gas-oil cargoes from the Middle East and India into Singapore, they added, when they typically used to head to Europe or Africa.