Vitol Sells Paradip Refinery Naphtha To Japan, Develops New Trade Route

Vitol sells Paradip refinery naphtha to Japan, develops new trade route

15-Jun-16

Geneva-headquartered Vitol, one of the world's largest traders in crude oil and oil products, has sold a naphtha cargo sourced from the new Indian refinery in Paradip for shipment to Japan, as per sources in Platts. An LR1 tanker, the Gulf Pearl, will load a 55,000 mt naphtha parcel for Vitol this week from Paradip, a port and refinery town on India's east coast, the executives said. A Vitol official declined to comment.
So far, close to 250,000 mt of naphtha from Indian Oil Corp.'s new refinery in Paradip have been sold in recent months for export, mostly to Vitol for shipments to Singapore and North Asia, sources said. The deals are significant because they open an altogether new trade route for clean product tankers.
The sale also comes at a time when Asian naphtha supplies are at a surplus, as demand has weakened owing to a slowdown in production of petrochemicals. Many petrochemical plants in Asia are also opting to use LPG as feedstock, thereby reducing demand for clean product tankers to move naphtha in the region, traders and brokers said.
This is reflecting in freight rates and analysts expect any new route, such as Paradip-Japan, can absorb some of the excess tonnage, at least in the medium term. Lifting of naphtha from Paradip is currently limited.

The benchmark Persian Gulf-Japan LR1 rate was Monday assessed at w92.5, down from w152.50 at the beginning of the year, according to S&P Global Platts data. The bulk of India's naphtha exports have hitherto been from India's west coast where refineries have surplus volumes for sales. The refinery in Paradip is currently being operated to maximize gasoline production, but occasional naphtha sales are still being made for shipments overseas in LR1 and MR tankers, sources said. An LR1 tanker typically carries up to 55,000 mt of naphtha while around 35,000 mt are shipped in MRs.
"There is strong demand for Indian naphtha in China and Japan and some of it can be sourced from Paradip," a trading executive said.