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On the 29th October, the global Vortexa team came together to discuss the middle distillates market, taking stock of the market from both sides of the pond, from Europe to America.
Senior Market Analyst Jay Maroo, Senior Freight Analyst Arthur Richier, and Lead Market Analyst Will Holeman discussed:
Europe middle distillates floating storage
Europe to PADD 1 middle distillates flows
PADD 3 to Brazil middle distillates flows
Asia to PADD 5 jet fuel flows
Below are some of the top questions asked during the webinar, which you can watch on demand here.
How do you define floating storage capacity?
Any cargo held stationary aboard a tanker for longer than 7 days we classify as floating storage. During the first 30 days, the cargo is deemed as short term floating storage. Anything longer than 30 days, we then consider it to be long-term floating storage.
How long can you store clean products before it starts to degrade and goes off-spec?
We haven’t yet come across any indications suggesting there is degradation or quality issues from a cargo sitting in floating storage for a prolonged period. During Q2 there was concern about jet fuel’s viability to be held in tankers as storage but we’ve seen tankers with cargoes held offshore for multiple months. The cargo itself will likely need re certification but the quality of the product aboard doesn’t seem to be an issue.
PBF is shutting the Paulsboro refinery as per report this week. What will this mean for the TA arb?
The simple answer is that any kind of reduction in PADD 1 refining capacity will support an increase in imports for refined products, including diesel or gasoil. Given the current difference in northwest European and PADD 1 diesel prices, European or Russian Baltic diesel is for now a viable supplier.
Are we seeing smaller vessels from the legacy dirty fleet going clean like the VLCCs?
The answer is yes. Since the end of Q1 2020/beginning of Q2 2020 we have seen close to 15% of the total LR2 fleet that was trading crude and dirty products transition back into the clean tanker pool and about 5% of the LR1 fleet.
To watch the webinar and see the full analysis of the middle distillates market, click below!