Analytics Vortexa

Russian diesel exports flowed to the unusual storage location of Swedish caverns at a record pace in April, Vortexa data show, amid the twin effects of weaker European diesel demand and tighter onshore storage availability at regional hubs. The slowdown of flows along this route more recently reflects the limited viability of such unusual onshore storage options. In the regional European market this adds another downward pressure to European diesel margins, pending an uptick in demand or more run cuts. 

Spotlight on Sweden

  • Typically a net diesel exporter, Sweden competes with Russian Baltic ports to supply major regional consumers such as the UK, Germany and France. But the rise in Russian exports to Swedish storage locations tipped the balance the other way in recent weeks, amid a huge oversupply in northwest Europe. 
    • Russian diesel flows to Sweden jumped from relatively small volumes to 700,000 t in April — the highest monthly total recorded by Vortexa since January 2016. 
    • Diesel flows along this route continue in May but at a much reduced rate, reflecting tighter storage capacity. Around 100,000 mt of diesel departed Russia for Sweden so far this month. The slowdown in exports is partly driven by lower total loadings scheduled from Primorsk this month.
  • Given the low freight costs, storage capacity available on Sweden's east coast is especially attractive to traders seeking to store cargoes loaded from Russian Baltic ports such as Primorsk and Vysotsk - the former being the single largest origin port for northwest Europe's diesel imports.
    • Russian diesel in floating storage has also risen in recent weeks as part of the global trend of refined products waiting much longer than usual to discharge. More than 500,000 mt of Russia Baltic/Black Sea diesel was observed in floating storage on 12 May.

Russian Baltic and Black Sea Diesel in FS

Russia Black Sea and Baltic diesel in floating storage (mt)

Cavern storage vs. demand hub trends in Sweden

  • Swedish ports Gavle, Norrkoping, Karlshamn and Stenungsund imported a record amount of diesel from all sources in April. The common thread among these ports is all four are linked to oil cavern storage - typically cheaper but less utilised than on-land tanks, as the latter usually offers greater speed and flexibility in moving product in and out.
  • The aforementioned ports accounted for less than a quarter of Sweden’s 2019 diesel imports — most imports discharge into the higher consumption centres of Stockholm and Gothenburg.
    • Diesel imports at the latter two ports dipped in April to 10-month low of less than 70,000 t. But May imports suggest some demand recovery, with May imports currently on track to surpass 100,000 t by the end of the month. -

Swe April ports

Russia diesel flows to Sweden by port in April (mt)  - Vortexa

 

 

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