Singapore opens into Africa as West Coast India shuts, with both FSD forecasts still neutral

The WCI and SEA MR load region arb margins have moved in opposite directions this week without either freight market overreacting. Singapore loading margins are open and improving into East and Southern Africa, while every material West Coast India diesel loading arb is now shut. The Freight Supply and Demand (FSD) model has TC7 at WS 463 forecast to WS 465 and TC12 at WS 388 forecast to WS 390 into the 28 September to 7 October window, so neither route is indicating a material move by the model.

Singapore is now landing materially better into Africa. The diesel arb to Durban is open at +$4.35/bbl for October and widens to +$9.10/bbl for November, with Dar-es-Salaam at +$3.00/bbl for October and +$6.90/bbl for November. These are material margins and bullish for MR demand. It is already showing in the fixture list: Weco Senna took ULSD Singapore to South Africa for a 28 September laycan. Gasoline into Mexico arb margins are improving, with Rosarito at +$0.85 cpg for November loaders.

The tonnage supply picture supports both regions modestly. SEA MR vessel supply sits at 15 ships in the seven-day ahead window against a 90-day average of 18, with incremental demand at 1 vessel. Earnings are already respectable into Africa, with Singapore to Durban at $69,217/day and Dar-es-Salaam at $66,372/day. A tightening list with African diesel margins widening into November is supportive of spot TC7 rates.

West Coast India diesel arb margins have deteriorated. Sikka to Singapore diesel is shut at -$10.75/bbl for October and -$9.45/bbl for November, Durban at -$4.35/bbl and -$8.85/bbl, Dar-es-Salaam at -$4.65/bbl and -$6.85/bbl, and La Plata at -$15.00 cpg and -$13.55 cpg. On the arb margins alone, the region should be quiet. It is not. Fixing has continued at a steady pace and across an unusually diverse set of destinations and grades over the past three days, with Largo Apollo on subs Sikka to South Africa at WS 480, Nord Master taking alkylate Sikka to the US West Coast at $4.5m, Basset fixing naphtha Sikka to Japan at WS 375, STI Queens lifting jet New Mangalore to East Africa at WS 500 and Sanmar Shehnai going Sikka to Colombo.

The diverse fixture spread with long-haul destinations is helping to keep WCI tonnage tight despite currently closed diesel economics. Tonnage supply is at 9 ships against a 90-day average of 14, a deficit of 5, the tightest of the two regions by some margin, with incremental demand at 1 vessel. Earnings hold up, with Sikka to Dar-es-Salaam at $61,938/day, Durban at $58,484/day and Paranagua at $58,251/day, although these TCEs are worse than Singapore loaders.

If US diesel export restrictions progress, Europe will price to pull barrels from further east, and WCI, Singapore and the Far East are the natural swing suppliers. Diesel export demand out of Singapore should only increase from here. The November diesel arbs at +$9.10/bbl into Durban and +$6.90/bbl into Dar-es-Salaam are strong signals.