India's diesel exports to Europe probably surged to record in September, sources say

India's diesel exports to Europe probably hit an all-time high in September, data from shiptrackers and trade sources showed on Thursday, as traders cashed in on robust profits in the west during a refinery maintenance season.

September volumes from Asia's key swing supplier bound for Europe were at 1.3 million to 1.4 million metric tons (9.7 million to 10.4 million barrels), data from LSEG, Kpler and two trade sources showed.

Shiptracking data showed India's exports to Europe reached these levels for the first time since such figures began to be recorded in 2017.


India's refiners, which source about a third of their crude from Russia, are boosting runs and redirecting surplus products abroad, with gasoline and diesel shipments hitting multi-year highs.

Total diesel exports for September were also at five-year highs of nearly 3 million tons, Kpler shiptracking data showed.

EAST-WEST SPREAD WIDENS

The diesel east-west spreads averaged $45 per metric ton in September, up from less than $30 in August, LSEG pricing data showed, spurring traders to move the product to Europe.

European prices strengthened as refinery maintenance has reduced diesel supply there, traders said.

In Europe, crude processing capacity of some 550,000 barrels per day to 600,000 bpd is expected to be offline in October, two of the sources said, up from around 400,000 bpd in September.

Shipping costs have also fallen by about $10 per ton, data from two shipbrokers showed.

The cost to ship 90,000 tons of refined fuel on the India-Europe route fell to $3.25 million to $3.5 million in the second half of September from $4 million to $4.2 million in the period from the end of August to early September, the data showed.

The rise in India's shipments to Europe has tightened supply in Asia, pushing up 10-ppm sulphur gasoil cash premiums to nearly $1.50 a barrel, the highest in two months.

However, Vortexa's head of APAC analysis, Ivan Mathews, said he forecasts India's transport fuel exports to fall month on month in October due to higher domestic demand during the Diwali festive season.

Ultimately, this expected decline in exports could be limited as product cracks are higher than the same period last year, which could "incentivise export-oriented refiners in India to run harder on the margin" and encourage some export sales, he added.

Looking ahead, traders remained cautious on diesel volumes on the India-Europe trade route, given a lack of details about how the European Union's 18th sanction package banning refined products derived from Russian oil will affect India's fuel exports.

Volumes can easily be swapped out for Middle East-origin barrels, which are readily available, two of the trade sources said.