Europe diesel premiums rebound slightly on shift to winter spec

23 October 2013 16:25  [Source: ICIS news]

LONDON (ICIS)--Northwest European diesel barges premiums over ICE gasoil futures rose slightly on Wednesday as buyers and sellers shifted their focus from intermediate-spec diesel to the winter grades, sources said.

Diesel barges premiums rose to $13-14/tonne FOB (free on board) ARA (Amsterdam-Rotterdam-Antwerp) on Wednesday from $11-12/tonne FOB ARA earlier in the week.

A diesel trader said: "If you really want to buy, it is a bit more expensive today. I think in the [window] there are lots of people trying to get rid of their intermediate spec. Now when you buy the winter spec, you need to pay a bit more."

A second diesel trader said: "The market is little bit better bid and somewhat less aggressively offered [today]."

Aggressive selling off of the intermediate grade - the grade used between the summer and winter grades - had led to a sharp drop in diesel barges premiums in recent weeks.

Moreover, premiums were under pressure as last week more barges became available to transport imports that had previously arrived from the US, Russia and Asia.

Despite the slight increase seen on Wednesday, diesel premiums are yet to recover from the sharp seasonal decline traditionally seen during autumn, after the busy summer period is over.

Demand for winter-spec grades does not usually match the demand for summer-spec diesel.

Nevertheless, demand for winter-spec diesel is healthy in Germany and much better than in other parts of Europe, the second diesel trader said.

"Real demand is only for German winter now. Only some systems working in Belgium/Netherlands can still take intermediate, but with current strong spread not really having appetite," the second trader said.

($1 = €0.73)

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By: Cuckoo James
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