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Sources say that India's diesel exports into Europe likely surged to a record high in September.

Data from shiptrackers showed that India's diesel exports reached a record high in Europe in September. This was due to traders taking advantage of the robust profits made in the West during a season when refineries are being maintained.

Data from LSEG and Kpler, as well as two other trade sources, showed that the September volumes of Asia's main swing supplier bound to Europe ranged between 1.3 million and 1.4 million metric tonnes (9.7 to 10.4 millions barrels).

India's exports reached this level for the first time in 2017 since these figures were recorded.

India's refiners are increasing runs and sending surplus products overseas. Gasoline and diesel shipments have reached multi-year records.

Kpler data on ship tracking showed that total diesel exports in September reached a five-year record of almost 3 million tonnes.

WIDENESS OF EAST-WEST DISTRIBUTION

The diesel east-west price spreads were $45 per metric tonne in September. This was up from $30 in August.

Traders said that European prices increased as refinery maintenance reduced the diesel supply in Europe.

Two sources have said that in Europe, the crude processing capacity is expected to drop from 400,000 barrels per day in September to around 600,000 barrels per daily in October.

Two shipbrokers' data showed that shipping costs had also dropped by $10 per ton.

Data showed that the cost of shipping 90,000 tonnes of refined fuel along the India-Europe route dropped from $4 million to 4.2 million between the end of August and early September to $3,25 million to $35 million in second half of September.

India's increased shipments of gasoil to Europe have tightened the supply in Asia. The 10-ppm premium for sulphur has risen to $1.50 per barrel, its highest level in two months.

Ivan Mathews is Vortexa’s head of APAC Analysis. He said that he expects India’s transport fuel to drop month-on-month in October, due to the higher domestic demand around Diwali.

This expected decline in exports may be limited, as the product cracks are greater than they were in the same period of last year. This could "incentivize export-oriented refiners to run harder at the margins" and encourage export sales, said he.

In the future, traders are cautious about diesel volumes along the India-Europe trade routes, as there is no information on how the 18th EU sanction package, which bans refined products made from Russian oil, will impact India's fuel imports.

Two sources of trade said that it is easy to swap out the barrels for those from the Middle East, as they are readily available.

(source: Reuters)