Naphtha from the Mideast Gulf region could go to Brazil in July in a rare arbitrage trade, according to shipping fixtures and data from analytics firm Vortexa. If the booking is confirmed, this would make the second such trade this year after none were recorded in the past four years.
TotalEnergies' shipping arm CSSA placed the Torm Eva on subjects on 13 July to load 55,000t of naphtha from the UAE port of Fujairah, with Brazil indicated as the discharge point. The booking could still fail.
A trader said that the trade could be the result of Saudi Arabia refiners taking Russian oil products at competitive prices and exporting their own. Around 13,000t of Russian naphtha arrived in Saudi Arabia in June, according to Vortexa. Meanwhile, shipments from Russia, which overtook the US as Brazil's top naphtha supplier this year, have been decreasing recently because of maintenance at Russian refineries.
Mideast Gulf exports for Brazil are rare. The last tanker to depart the region with naphtha for the Latin American country was the Cielo Bianco with a 57,300t cargo from Jubail, Saudi Arabia, to Aratu on 24 May, data from Vortexa indicated. Before that, no such booking was recorded in at least last four years, according to Vortexa.
The May shipment occurred at a time when naphtha supply was plentiful in the Mideast Gulf region because of weaker petrochemical demand. Key naphtha buyers in Asia-Pacific were implementing maintenance at their crackers. Some cracker operators in South Korea, Taiwan, Singapore and Thailand also switched their feedstock partially to propane, a cheaper alternative to naphtha.
The Asian naphtha market was also oversupplied with the persistent inflow of Russia-origin cargoes. "So instead of going east, one tanker must have gone to Brazil," a Bahrain-based trader said.
Some market participants said that the negative naphtha east-west spread which had previously prompted a reverse flow of cargoes from Saudi Arabia to Europe, could have allowed the rare May Brazil trade. Spreads have remained negative in March-April before strengthening in May, but retreating the gains towards the end of the month. The April east-west spread fell to -$16.50/t at its lowest point in March.
