Brazil exports ULSD to US for first time in over two years: customs data

Houston — Brazil exported ULSD to the US for the first time in over two years last week, with the PTI Rhine making its way from Saupe and arriving in Ponce, Puerto Rico, on April 28, according to US customs data.

The PTI Rhine carried 273,691 barrels of ULSD, marking the first time Brazil has exported ULSD to the US since January 27, 2018, the customs data show. Previously, the Axios carried 303,955 barrels of ULSD from Saupe to New York City, the data showed.

Due to the Jones Act, which allows only US flagged vessels to carry product between US ports, Puerto Rico typically imports ULSD from other countries rather than the US as it is a more cost-efficient method.

So far in 2020, Puerto Rico has imported ULSD from Canada, Colombia, the Netherlands, Panama, the British Virgin Islands and now Brazil, the customs data show.

While one source indicated Puerto Rican demand for ULSD has been subdued during the coronavirus pandemic, the source qualified that by saying the recent shipment could be used for power generation.

The source also said Brazil exporting ULSD meant "Brazil must be getting high in inventories with the shutdown."

Brazil has begun exporting refined products at record levels due to the pandemic.

In March, Brazil exported 14.953 million barrels of refined products, according to National Petroleum Agency data released Friday. That figure is 47.3% above the previous record of 10.150 million barrels, which were exported in January, ANP data showed. It is also over two-and-a-half times higher than the 5.645 million barrels exported in March 2019, according to the ANP.

US Gulf Coast ULSD exports to Brazil have also thinned during the pandemic, with one trader saying cargo activity in April was "up from zero to four cargoes, usually they take 10 to 12 per month."

The premium for S10, a Brazilian specification of ULSD, over the USGC ULSD prompt pipeline assessment less the renewable voluntary obligation fell to 10 points/gal on April 24, the narrowest level seen since S&P Global Platts began recording the differential on August 31, 2018.