Platts proposes to change European ULSD, gasoil netback and net-forward freight baskets Jan. 3, 2023

Platts, part of S&P Global Commodity Insights, is proposing to change the freight baskets and freight rates used in the calculation of its European ULSD and gasoil netback and net-forward cargo assessments to exclude Russian loadports and take into account changing trade flows into Europe with effect from Jan. 3, 2023.

This is in light of an upcoming EU ban on Russian oil product imports from Feb. 5, 2023, and follows the decision by Platts to exclude Russian origin material in its CIF cargo assessments from June 1, 2022: https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/060122-platts-excludes-russian-origin-product-from-european-diesel-gasoil-cargo-assessments-june-1

Observations of changing trade flows so far as well as market feedback have suggested that the NWE ULSD and gasoil markets will increasingly be served by the Amsterdam-Rotterdam-Antwerp region, where Long- and Medium-Range tankers from the East of Suez and the US Gulf Coast are expected to break bulk, combined with domestic NWE supply. In the Mediterranean ULSD and gasoil markets, supply into the CIF handysize market is expected to continue to come from regional refiners, particularly from the East Mediterranean.

The proposed changes and the affected assessments are as follows:

• Diesel 10 ppm Cargoes CIF NWE (AAWZC00)

Under the proposal, Platts will assess Diesel 10 ppm Cargoes CIF NWE (AAWZC00) as a freight net-forward to ULSD 10 ppm Cargoes CIF NWE (AAVBG00), based on the following routes, and utilizing the daily freight rates published in the Platts Clean Tankerwire:

As a comparison, the 2022 average of the incremental freight based on the basket of routes listed above would have calculated to $1.05/mt. The basket currently in use for 2022 employs voyages with loadports including Amsterdam, Rotterdam, Antwerp, Klaipeda, Wilhelmshaven and Ventspils discharging to Le Havre and calculates to $1.36/mt and utilizes the Clean Baltic-UKC 30kt MR Wsc (TCAFL00) freight rate.

• ULSD 10 ppmS FOB NWE Cargo (AAVBF00)

Under the proposal, Platts will assess ULSD 10 ppmS FOB NWE Cargo (AAVBF00) as a freight netback to ULSD 10 ppm Cargoes CIF NWE (AAVBG00), based on the following routes, and utilizing the daily freight rates published in the Platts Clean Tankerwire:

As a comparison, the 2022 average of the Worldscale flat rates for the routes listed in the basket above would have calculated to $4.60/mt. The basket currently in use is based on the following routes: Brofjorden, Porvoo, Slagen, Primorsk, Riga and Kaliningrad to Amsterdam, Rotterdam and Antwerp and calculates to $7.38/mt and utilizes the Clean Baltic-UKC 30kt MR Wsc (TCAFL00).

• Diesel 10 ppm NWE Cargoes FOB NWE (AAWZD00)

Under the proposal, Platts will assess Diesel 10 ppm NWE Cargoes FOB NWE (AAWZD00) as a freight netback to Diesel 10 ppm Cargoes CIF NWE (AAWZC00), based on the following routes, and utilizing the daily freight rates published in the Platts Clean Tankerwire:

As a comparison, the 2022 average of the Worldscale flat rates for the routes listed in the basket above would have calculated to $5.73/mt. The basket currently in use is based on the following routes: Amsterdam, Rotterdam, Antwerp, Klaipeda, Wilhemshaven, Ventspils to Le Havre and calculates to $7.72/mt and utilizes the Clean Baltic-UKC 30kt MR Wsc (TCAFL00) freight rate.

• 10 ppm ULSD Cargoes FOB Med (AAWYY00)

Under the proposal, Platts will assess 10 ppm ULSD Cargoes FOB Med (AAWYY00) as a freight netback from the 10 ppm ULSD Cargoes CIF Med (AAWYZ00), based on the following routes, and utilizing the daily freight rates published in the Platts Clean Tankerwire:

As a comparison, the 2022 average of the Worldscale flat rates for the routes listed in the basket above would have calculated to $6.50/mt. The basket currently in use is based on the following routes: Santa Panagia, Aliaga, Agioi Theodoroi and Novorossiisk to Genoa and Lavera and calculates to $7.72/mt. It utilizes the Clean Med-Med 30kt MR Wsc (PFADB10) and Clean Black Sea-Med 30kt MR Wsc (PFABX00) freight rates.

• Diesel 10 ppm UK Cargoes CIF NWE – original (French) spec (AUKDA00)

Platts is proposing to maintain the current freight basket and freight rates used to calculate this assessment. It will remain as a freight net-forward to the ULSD 10 ppm CIF NWE assessment (basis ARA), based on a freight differential to typical UK ports and using daily freight rates published in the Platts Clean Tankerwire, namely Clean Baltic-UKC 30kt MR Wsc (TCAFL00) freight rate. This is a temporary assessment, scheduled to be published until December 2023.

GASOIL

• Gasoil 0.1% Cargoes FOB NWE (AAYWR00):

Under the proposal, Platts will assess Gasoil 0.1% Cargoes FOB NWE (AAYWR00) as a freight netback to Gasoil 0.1% Cargoes CIF NWE (AAYWS00), based on the following routes and utilizing the daily freight rates published in the Platts Clean Tankerwire:

As a comparison, the 2022 average of the Worldscale flat rates for the routes listed in the basket above would have calculated to $6.70/mt. The basket currently in use is based on the following routes: Ventspils, Antwerp and Stockholm to Le Havre and calculates to $8.39/mt and utilizes the Clean UKC-UKC 22kt MR Wsc (PFALY00) freight rate.

• Gasoil 0.1% Cargoes FOB Med (AAVJI00):

Under the proposal, Platts will assess Gasoil 0.1% Cargoes FOB Med (AAVJI00) as a freight netback to Gasoil 0.1% Cargoes CIF Med (AAVJJ00), based on the following routes and utilizing the daily freight rates published in the Platts Clean Tankerwire:

As a comparison, the 2022 average of Worldscale flat rates for the routes listed in the basket above would have calculated to $5.98/mt. The basket currently in use is based on the following routes: Sarroch, Novorossiisk and Agioi Theodoroi to Genoa and Lavera. It calculates to $8.01/mt and utilizes the Clean Med-Med 30kt MR Wsc (PFADB10) and Clean Black Sea-Med 30kt MR Wsc (PFABX00) freight rates.

Platts will continue to monitor prevailing trade flows. Platts has also clarified that it may normalize bids, offers, and trades reported in its Market on Close assessment process into ports other than the basis through daily review of prevailing flow.

Please send any feedback, questions or comments to europe_products@spglobal.com and pricegroup@spglobal.com by Oct. 14, 2022. For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available upon request.