Yahoo Finance S. Korea's March diesel shipments to Singapore set to hit 2-1/2-yr high
By Trixie Yap
SINGAPORE, March 21 (Reuters) - South Korean diesel shipments to Singapore for March are on track to hit 2-1/2-year highs, with cargoes likely to be stored temporarily or blended in Asia's oil hub in a rare move as traders struggle to find end-users for the fuel, analysts and traders said.
Rising supplies from the region's top diesel exporter will add to inventories in Singapore, which hit a 2-1/2-year high last week, capping prices and refiners' margins in Asia, they said, despite expectations of lower exports from Russia following Ukrainian drone attacks on its refineries.
South Korean diesel shipments to Singapore are expected to hit 403,000-417,000 metric tons (3 million to 3.11 million barrels) for March loading, the highest since September 2021, extending gains since the start of the year, Kpler and LSEG data showed.
The wave of exports is led by French oil major TotalEnergies and global traders Trafigura and Vitol, shiptracking data showed.
It comes as South Korea's exports to other key destinations such as Australia dipped around 25% month on month, tracking a steady decline since January, Kpler and LSEG shiptracking data showed. South Korea's oil majors typically can sell to direct end-users without traders in between.
"Asia's demand (is) not fantastic to begin with, so diesel barrels have limited outlets," LSEG Oil Research analysts said in a email, adding that high freight costs are also deterring traders from sending cargoes beyond Asia.
South Korean diesel shipments to the Americas in February and March also dipped after hitting multi-year highs in January, Kpler and LSEG shiptracking data showed.
In Australia, South Korea's diesel market share shrank after Taiwan's exports to Australia likely rose by 25% month-on-month in March, Kpler data showed, led by shipments from major traders Glencore and Vitol.
"Most of our spot sales in the past few months have been heading to Australia," a key Taiwanese refiner source said.
A slew of Taiwan-origin spot cargoes were earlier available for both February and March given fewer term deliveries this year compared with 2023 and higher refinery runs after the maintenance season, and this could have resulted in the competition with South Korean barrels, one source said.
The slowdown in demand for South Korean diesel has widened spot discounts to above $1.50 a barrel for cargoes loading in April, traders said.
Costs for shipping 40,000 tons of diesel from South Korea to Singapore onboard an MR-sized tanker have dipped to a two-month low of around $875,000, data from shipbroker SSY showed, encouraging traders to move the discounted barrels to store at the Asia oil hub.
Meanwhile, Asian refiners' gasoil margins have averaged $24 a barrel in the first quarter, down from $24.80 in the previous quarter.
(Reporting by Trixie Yap; Editing by Florence Tan and Sonia Cheema)
