US West Coast refiners are stepping up imports of gasoline and alkylate from Asia to offset supply tightness following unplanned outages at two major refineries there -- reversing a recent trend that saw a steady stream of gasoline exports from oil majors to meet their system requirements in Asia-Pacific.
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At least 90,000-140,000 mt of gasoline and alkylate -- in three to four MR-size cargoes -- were estimated due for March delivery into the US West Coast, including rare alkylate exports from Japan, according to a Singapore-based trader Thursday.
"It is a golden moment for Asian refiners to export gasoline to the US West Coast now," he said.
Of these, the Maersk Miyajima, which is capable of carrying 331,000 barrels of alkylate, is expected to arrive at the Port of Los Angeles on March 23, Platts ship-tracking software cFlow shows.
The vessel has made multiple loadings from Japan's Kawasaki and South Korea's Daesan and Gwangyang. Trade sources in Asia said part of the alkylate cargo could have been supplied by Japanese refiner TonenGeneral. A TonenGeneral spokesman declined to comment.
Another vessel Stolt Spray is scheduled to arrive at Los Angeles port on March 22 after leaving Negishi, Tokyo Bay on March 5, according to Platts cFlow. Japan's largest refiner JX Nippon Oil & Energy operates the 270,000 b/d refinery in Negishi.
Alkylate is used as a blendstock for the production of 84 octane Los Angeles CARBOB as well as 88.5 octane premium Los Angeles CARBOB grades.
Asia's trading hub Singapore has also seen a marginal increase in gasoline exports to the US in March, weekly trade data from government agency International Enterprise Singapore data showed. More could follow as refinery issues in the US persist, trade sources said.
So far this month, Singapore exported 17,246 mt (145,700 barrels) of gasoline to the US as of the week ended March 11, the data showed. This compares to exports of 1,140 mt in February and 8,702 mt in January.
But Singapore saw far higher imports from the US into its storages this year, at 52,270 mt in January, 62,779 mt in February and 71,177 mt so far in March, particularly following the closure of outdated refining capacity in Australia.
JAPAN'S EXPORTS COULD BE FIRST MAJOR FLOW SINCE HURRICANE KATRINA
While Singapore and South Korea are now typical export hubs for arbitrage supply across the Pacific Ocean, Japan has in recent years, limited exports especially after the devastating earthquake and tsunami on March 11, 2011 which crippled its refining sector. In addition, the expansion of South Korea's secondary refining capacity also saw South Korea overtake Japan as a key gasoline supplier to the US West Coast.
But with ongoing refinery issues in the US since early February, Japan's gasoline exports saw a concurrent dramatic spike in the week over February 15-21.
Japan exported a record-high level of 1.01 million barrels in the week to February 21, almost triple the 359,731 barrels in the previous week, data from Petroleum Association of Japan showed. The last time exports from Japan were any higher was for the week ended December 11, 2010, when gasoline exports were at 921,925 barrels.
In the week to March 7, Japanese refiners' exports of gasoline came in at 469,775 barrels, down 34.5% from 717,224 barrels in the previous week, PAJ data showed.
PAJ data counts alkylate and other gasoline blending components as gasoline.
The outflow of gasoline and alkylate from Japan to the US West Coast in March could be the first massive movement since 2005, when Japan hiked exports in response to a request from the International Energy Agency for Japan to release 7.32 million barrels of oil to mitigate supply disruptions resulting from damages on US Gulf rigs and refineries from Hurricane Katrina.
In September 2005, Japanese refiners exported at least around 49,000 kl (308,200 barrels) of maximum 0.001% sulfur gasoline and alkylate and exported at least 22,000 kl of alkylate in October to the US, Platts reported then.
Meanwhile, latest data released Wednesday by the California Energy Commission shows refinery production of CARBOB fell 6.7% to 6.1 million barrels in the week ended March 6. Refinery stocks of CARBOB fell 1.6% to 5.320 million barrels, and is 15.1% lower than were stocks stood at the same time last year.
Tesoro's 166,000 b/d Golden Eagle in Martinez California has been completely shut since February 1 because of the ongoing United Steelworkers strike.
The Golden Eagle plant has an alkylation unit capable of producing 15,400 b/d, data from the US Energy Information Administration shows.
Further south, ExxonMobil's 155,000 b/d Torrance refinery was hit by an explosion in an electrostatic precipitator on February 18, causing a fire which downed the fluid catalytic cracker, alkylation unit, reformer and hydrocracker. The refinery subsequently shut the sole crude distillation unit at the refinery on March 5. The alkylation unit has a production capacity of 24,200 b/d, EIA data shows.