US diesel shipments to Brazil to surpass Russian volumes by 20% in week 51: CAS

The US is expected to be the main diesel supplier to Brazil in the week ending Dec. 22, with US-origin volumes projected 22% higher than Russia-origin volumes, according to preliminary data from S&P Global Commodities at Sea and Platts cFlow ship and commodity tracking software from S&P Global Commodity Insights seen Dec. 13.

Preliminary data showed 1.7 million barrels of gasoil and diesel are scheduled to be discharged at Brazilian ports in the week of Dec. 16-22, which is almost the same volume as the week ended Dec. 15.

Some 940,832 barrels of US-origin diesel are expected to arrive in Brazil by Dec. 22, which is 171,832 barrels more than the volume scheduled to arrive from Russia.

Platts, part of Commodity Insights, assessed the spread between US- and all-origin ultra low sulfur diesel in South Brazil at a premium of 3 cents/gal on Dec. 12, lower than the premium of 2.75 cents/gal on Dec. 5.

According to the daily report of the Association of Brazilian Fuel Importers released on Dec. 13, the average domestic diesel price in the country was 5%, or Real 0.14/liter, lower than the import parity level.

The port of Suape in the Pernambuco state in Northeast Brazil was due to see the highest number of ships discharging in the week ending Dec. 22, with around 860,289 barrels expected to arrive in the period. The vessel tracking data showed around 60% of the volume expected to Suape is expected to be loaded from Russia.

Market participants said Russian gasoil is offered around a discount of 8 cents/gal against NYMEX ULSD January futures contract in Northeast Brazil.

Platts assessed FCA Suape ULSD, or S10-grade diesel in Brazil, at Real 3,508.90/cu m on Dec. 12, at a Real 140/cu m premium to Petrobras' EXA Ipojuca price.

Traders said demand from end-consumers was still quite poor in the Northeast region, and biodiesel price levels were impacting the cost of the blended product. Currently diesel sold at the pump in Brazil contains 14% biodiesel.

In Paranaguá, around 226,000 barrels of diesel is expected to be discharged next week, the vessel tracking data showed.

US diesel stocks on the rise

Diesel stocks in the US have been ample, with the most recent data from the US Energy Information Administration showing stocks surged to a 2.5-month high in the week ended Dec. 6.

ULSD inventories in the US swelled to 112.940 million barrels in the most recent reporting week, led by increases across all five Petroleum Administration for Defense Districts districts, most notably the US Gulf Coast and US Midwest, where stocks rose by 933,000 barrels to 35.912 million barrels and by 790,000 barrels to 27.602 million barrels, respectively.

However, US ULSD exports slid by 79,000 b/d to 1.471 million barrels in the week ended Dec. 6, falling from a four-month high in the previous week.

Monthly diesel and gasoil exports to South America topped 16.6 million barrels in November, behind only July 2022, which saw exports of 18.4 million barrels, the highest volume in the past five years, according to CAS data.