Asian demand slump pushes fuels trans-Pacific
A slowdown in transportation fuel imports in Asia Pacific, along with rising Americas West Coast clean product import demand has supported arbitrage flows between the two regions. Transpacific gasoline arrivals from Asia to Americas West Coast rose by 60% m-o-m in May, and the trend will likely continue in summer.
Transport fuel imports in Oceania and Asia (excluding Singapore and Malaysia) fell to a two-year low of 2.8mbd, slightly under the nine-year seasonal range in the first 25 days of May. The slowdown in imports can be attributed to seasonal demand weakness in the southern hemisphere during winter, higher biofuel blending mandates and weaker-than-expected demand. The reduction in imports is a stark contrast to December 2024 import figures, when transportation fuel imports reached record highs of 3.5mbd.
Northeast Asia jet/kerosene demand plunges to seasonal lows
Jet/Kerosene imports in Northeast Asia declined to a one-year low of 56kbd and fell under the seasonal range due to lower kerosene demand for heating purposes during the summer months. The reduction in jet/kerosene consumption, primarily seen in Japan, resulted in lower intra-Northeast-Asia jet/kerosene flows, freeing up supplies for other regions.
As new refineries started up in the Middle East, Northeast Asian refiners struggle to gain jet fuel market share in Northwest Europe, given the proximity and other advantages of Middle Eastern refiners. Northeast Asian jet fuel exports to Northwest Europe have fallen for the third consecutive year in YTD 2025, with diminishing arbitrage opportunities in a highly competitive market.
Concurrently, Northeast Asia jet fuel exports to the Americas West Coast increased in May as jet fuel prices between South Korea and the US West Coast widened from mid-March to mid-April, improving transpacific jet fuel arbitrage economics. Jet cargoes booked during the open arbitrage period will show up only in May and June; hence, the uptick in exports to the Americas West Coast only started in May.
Transpacific gasoline arrivals soar to record highs in May
Americas West Coast gasoline imports reached 450kbd in the first 25 days of May and fully monthly figures may exceed the previous record of 440kbd set two years ago in May. The influx of gasoline cargoes was driven by higher imports in PADD 5 (US West Coast), as refinery utilisation rates in PADD 5 (EIA) fell under 80% for the first time in over a year in March due to unplanned refinery outages.
Concurrently, the slowdown in gasoline imports in Asia Pacific weighed on Asian gasoline prices, creating opportunities for traders to move gasoline to the Americas. The gasoline spread between Singapore and Mexico has widened since March to $10/bl (Argus Media) and the spread continued to fluctuate between $6/bl and $11/bl (Argus Media) over the past two months, prompting traders to capitalise on arbitrage flows. Mexico West Coast gasoline imports doubled in May as the region imported over 50% of its gasoline volumes from Northeast Asia and Southeast Asia.
Americas West Coast reliance on Asia for gasoline has strengthened over the past few months. Transpacific gasoline flows will likely continue over the next few months as North American gasoline imports pick up seasonally during summer. Jet fuel and gasoline imports from Asia will likely stay elevated as PADD 5 refineries such as 139kbd P66 Los Angeles and 145kbd Valero Benecia should close in 2025 and 2026, respectively.
