India lockdown: Refiners raise prompt exports as coronavirus saps demand

Singapore — Indian refiners have raised exports for prompt refined oil product cargoes, seeking buyers to offload supply quickly in a bid to offset a worsening demand-supply balance amid a nationwide lockdown.

Several Indian state-run companies were seen offering cargoes for prompt April loading dates throughout the week, according to open tenders seen by S&P Global Platts.

India's largest refiner -- Indian Oil Corp. --- for instance, was seen offering up to 64,000 mt of 92 RON gasoline, with the first 41,000-42,000 mt clip set to be loaded on April 5-10 from either Haldia/Paradip, two days following the tender's award date of April 3.

The second 21,000 -22,000 mt clip was also due to load shortly after April 9-10 from Kandla, the tender document showed.

The time between the award of a tender and the cargo's load date typically averages around three weeks, but since the start of India's nationwide lockdown, the turnaround time has been whittled down to as quickly as two to three days, according to Platts' observations.

The same trend was seen in middle distillates, with India's refiners rushing to push out spot cargoes into the market.

IOC also offered up to 62,000 mt of 10 ppm sulfur gasoil split for loading from Haldia and Paradip over April 10-15 with the tender closing on April 7, as well as 25,000 mt of jet A-1 fuel for loading from Paradip over April 8-9, with the tender closing April 2.

Fellow refiner Bharat Petroleum Corp. has also moved quickly, with its recent tender offering up to 40,000 mt of 10 ppm sulfur gasoil scheduled to load from Mumbai over April 6-8 following the tender's close being awarded five days prior on April 1.

"Indian demand has fallen more than expected and even though the refiners have cut rates, doesn't seem to be enough," a Singapore-based gasoline source said.

"Demand [for jet fuel] is dead now ... there are no flights in and out of the country," a second Indian refining source said.

India, the world's third-biggest energy consumer, was initially poised for energy demand growth, with January and February demand for oil products having risen by 4.5% on the year to 4.9 million barrels per day, according to data from the Petroleum Planning and Analysis Cell.

But a 21-day lockdown on March 25 have curtailed demand and forced Indian refiners to cut run rates.

IOC has reduced its run rates at its nine refineries by 20-30%, while the country's No. 2 refiner Bharat Petroleum Corp. cut crude throughput by 30% at its 310,000 b/d Kochi refinery and 241,000 b/d Mumbai refinery.

Lack of overseas demand

Despite the uptick in exports, the lack of overseas demand due to the wide-spread impact of the coronavirus pandemic has led to spot tenders being awarded at steep discounts, sources said.

"There is not much choice. If you have no storage and no good offers, you just have to take whatever you get," a third source said.

India's Nayara, for example, sold up to 60,000 mt of 92 RON gasoline for mid-April loading from Vadinar at a steep discount of around $4/b to the MOPS 92 RON gasoline assessments, Platts reported earlier.

BPCL also awarded its previously mentioned gasoil tender at a discount of $1.90/b to the MOPAG 10 ppm sulfur gasoil assessments. Both Nayara and BPCL's tenders were done on an FOB basis.

"Global demand for transport fuels have been hard hit. You would want to limit the intake of supply if you have no outlet to send it to. Global storage is also quickly filling up," said the third source.

Demonstrating the latter, light distillate stocks in Singapore -- the region's largest oil trading hub -- totaled 14.099 million barrels in the week ended April 1, higher than 2019's average of 12.631 million barrels and 2018's average of 13.387 million barrels, Enterprise Singapore data showed.

The rising storage situation is also reflected in other overseas outlets, further limiting the incentive for traders outside Asia to pick up Indian cargoes.

Gasoline inventories in Europe's Amsterdam-Rotterdam-Antwerp trading hub rose 4% to 1.19 million mt in the week ended April 1, while US gasoline inventories also surged 3.14% on the week to 246.81 million barrels in the week ended March 27, Platts reported earlier.

"Storage is an attractive option now given the steep contango. But there is a limit to how much you can store given that there is almost no demand," the third source added.