Reduced transportation fuel imports in Asia Pacific and increased demand for clean product imports on the Americas West Coast have facilitated arbitrage opportunities between these two regions, Vortexa said.
Oceania and Asia (excluding Singapore and Malaysia) experienced a two-year low in transport fuel imports during the first 25 days of May, reaching 2.8 million barrels per day, according to a Vortexa report.
The above figure is slightly below the typical nine-year seasonal range.
Xavier Tang, market analyst at Vortexa, said in the report:
Contrasting sharply with December 2024, which saw transportation fuel imports peak at a record 3.5 million barrels per day, the current decrease in imports represents a significant shift, the shiptracking agency said.
Northeast Asia demand for jet/kerosene slumps
Northeast Asia experienced a one-year low in jet/kerosene imports, dropping to 56,000 barrels per day and falling below the typical seasonal range, Vortexa data showed.
This decrease is attributed to reduced kerosene demand for heating during the summer.
Lower jet/kerosene consumption, particularly in Japan, decreased intra-Northeast-Asian flows.
This, in turn, made more jet/kerosene supplies available for other regions.
The recent establishment of refineries in the Middle East presents challenges for Northeast Asian refiners seeking to increase their jet fuel market share in Northwest Europe.
The geographical advantage and other benefits enjoyed by Middle Eastern refiners contribute to this difficulty, Tang said.
Northwest Europe has seen a third straight year of declining jet fuel imports from Northeast Asia since the beginning of the year till now.
This sustained decrease is attributed to reduced arbitrage possibilities within a fiercely competitive market.
Due to improved transpacific jet fuel arbitrage economics resulting from widened price differences between South Korea and the US West Coast from mid-March to mid-April, Northeast Asian jet fuel exports to the Americas West Coast rose in May, according to Tang.
Jet cargoes booked during the open arbitrage period will show up only in May and June; hence, the uptick in exports to the Americas West Coast only started in May.
Source: Vortexa
Transpacific gasoline arrivals
West Coast gasoline imports in the Americas are on track to surpass a two-year-old record.
During the first 25 days of May, imports reached 450,000 barrels per day, data from Vortexa showed.
If this pace continues, the full monthly figure will exceed the previous high of 440,000 recorded in May two years ago, the agency said.
Gasoline cargo influx was primarily due to increased imports in the US West Coast (PADD 5).
This rise in imports coincided with a drop in PADD 5 refinery utilization rates (EIA), which fell below 80% in March for the first time in over a year due to unforeseen refinery shutdowns.
Slowdown
A concurrent decrease in Asia Pacific gasoline imports put downward pressure on regional gasoline prices, leading to arbitrage opportunities for traders to ship gasoline to the Americas.
Source: Vortexa
The Singapore-Mexico gasoline price spread has expanded to $10 per barrel since March and has since ranged between $6 a barrel and $11 per barrel in the last two months, according to Argus Media, leading traders to exploit arbitrage opportunities.
Consequently, Mexico’s West Coast gasoline imports doubled in May, with over 50% of its gasoline volume sourced from Northeast and Southeast Asia.
“Americas West Coast reliance on Asia for gasoline has strengthened over the past few months,” Tang said.
Transpacific gasoline flows will likely continue over the next few months as North American gasoline imports pick up seasonally during summer.
Asian jet fuel and gasoline imports are expected to remain high.
This is largely due to the anticipated closures of PADD 5 refineries, specifically the 139,000 barrels per day P66 Los Angeles refinery in 2025 and the 145,000 barrels a day Valero Benecia refinery in 2026, Vortexa said.
