Ioc October Diesel Tender Draws Higher Offers

They said offers of 0.5 per cent sulphur diesel to the country's west coast ranged between $1.98 and $2.40 per barrel premium to MidEast spot quotes, on a cost-and-freight (c.&f.) basis.

In its last tender for September, IOC bought only 255,000 tonnes of 0.5 per cent sulphur diesel at between $1.70 and $1.85 per barrel over MidEast quotes, c.&f. Kandla or Goa and Kandla.

Traders said offers were also seen around 75 cents a barrel over Singapore spot quotes, c.&f. west coast.

But the cargo would be sourced from the Middle East, they added.

Cargoes for delivery to the east coast were seen at $2.65-$3.00 per barrel over MidEast quotes, c.&f.

 

Other east coast offers were seen around $1.30-$1.50 per barrel over Singapore spot quotes, c.&f.

In IOC'S tender for September, east coast offers were between $2.40 and $2.96 per barrel over MidEast quotes, c.&f.

Traders said offers of 1.0 per cent sulphur diesel were around 15-20 cents a barrel below the 0.5 per cent grade.

Traders noted that current MidEast premiums were firm with 5-per cent sulphur diesel traded recently around $1.00 per barrel over MidEast quotes, on a free-on-board (f.o.b.) basis, while the 1-per cent grade was around 70 cents premium, f.o.b.

The market was mixed on the volumes that IOC would take for October.

Earlier estimates placed it at between 800,000 and one million tonnes. But traders are now estimating that IOC would take between 600,000 and 700,000 tonnes.

They said India was faced with a perpetual demurrage problem and several cargoes from the previous month would be rolled-over to the forward month.

This might mean that IOC might not take any cargoes in the first week of October, traders said.

Demand in October was also not expected to be large because the current monsoon season was limiting requirements for agricultural purposes and the rains were also fuelling hydropower supplies to the fullest.

Traders also said that if offer levels were deemed too high, IOC might also not take too much this time, especially since the government raised domestic prices for diesel by 15 per cent in July.

Anxieties over the smaller-than-expected volumes that IOC might take for October caused the paper market to be offered lower on Friday from its opening levels of $25.90 to $25.65 a barrel for September and October, brokers said.

The market was, however, concerned by reports that the 160,000-barrel-per-day Mathura refinery would be partially shut for maintenance either in September or October for about 15 days.

If the refinery were to undergo a shutdown, it could spur IOC to take more volumes in October, especially after the small amount it took in September, traders said.