ARA faces pile-up of diesel seeking tanks and buyers

Diesel and gasoil shipments are piling up outside the key northwest European trading hub of Amsterdam-Rotterdam-Antwerp (ARA), as cargoes converge in the hope of finding storage space or inland buyers. But market participants say the region's tanks are almost completely booked up.

Four Long Range (LR) tankers, carrying more than 300,000t of diesel and other gasoil from east of Suez, are close to ARA with estimated arrival in the next two days, according to oil analytics firm Vortexa. In the current market they may act as floating storage, but if they were to discharge it would take gasoil arrivals in ARA to more than 800,000t in the week to 3 May, the highest for any week this year and above last week's year-to-date high of 726,000t.

ARA has the largest concentration of clean products tanks in northwest Europe and the largest range of outlet options, including by barge along the Rhine river into Germany. But independent gasoil stocks at ARA rose by 12pc in the week to 29 April even as outflows on the Rhine rose by as much as 50pc, according to consultancy Insights Global, reflecting an exceptionally large amount of gasoil arrivals.

Tanker bookings to the region continue to emerge: Saudi state-controlled Aramco, Chinese trading firm Unipec, India's Reliance and trading firm Mabanaft have all booked Long Range 2 (LR2) tankers to bring diesel to Europe from east of Suez in the past two weeks.

Regions that normally import diesel are now exporting as refiners, running low on storage, try to avoid closing production. For instance, market participants said diesel is being exported from the UK northwest coast, where Essar's 204,000 b/d Stanlow refinery continues to operate in the face of very weak domestic demand.

But ARA is receiving such a large amount of gasoil that it will soon face the same storage crunch as elsewhere. Market participants said that while ARA commercial tanks are not physically full, any empty space is almost entirely booked up. A broker said the inquiries he is receiving for floating storage, together with the current lack of inquiries about diesel cargoes, indicates a scarcity of available land-based space. Some traders have turned to barges, typically used to carry product inland on the Rhine, for floating storage.

European clean products storage could be filled by mid-May. Concerns about available tank space in the second half of May, when delivery will be made on Ice May gasoil futures, could be behind a notable fall in Ice gasoil futures liquidity today. Fewer than 7,500 lots on the front-month had changed hands by 14:00 BST (13:00 GMT), compared with more than 20,000 at the same time yesterday — a more typical level for this time of the month.

By Benedict George

source: Argus Media