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South Africa's Engen to ship gasoil to Singapore in rare move -sources
[SINGAPORE] South African petroleum company Engen is set to export a gasoil cargo to Singapore, according to trade sources and shipping data.
The company has provisionally booked the Torm Horizon to transport 35,000 tonnes of gasoil to Singapore from Durban, shipping fixtures showed.
The move would be unusual as South Africa rarely exports gasoil. Engen did not immediately respond to a request for comment.
The cargo likely comprises high sulphur gasoil whose premium has risen to a more than three-month high this month due to prompt demand in Southeast Asia, four traders and shipbrokers said. "South Africa is exporting 500 ppm (sulphur gasoil) 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.
South Africa consumes diesel with 10 parts-per-million (ppm) sulphur in its domestic market, he added.
A refinery typically exports high sulphur gasoil 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 10 ppm sulphur and 500 ppm sulphur gasoil narrowed to 5 cents 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 gasoil cargoes from the Middle East and India into Singapore, when they typically used to head to Europe or Africa, they added.