TC2 gasoline arb opens for the first time in several months as summer blending demand pulls ARA barrels West

WCI MR vessel supply in the seven-day ahead window stands at 8 ships against a 90-day moving average of 18, placing prompt availability 10 vessels below average. Tonnage supply has remained continuously below the trailing average since 13 April, making this one of the most sustained periods of WCI MR tightness in several months. Incremental demand adds +4 cargoes to the picture, and the FSD model forecasts rates to firm from WS 328 to WS 348 over the coming week into the 11 to 20 May load window.

Fixture activity over the past week confirms that WCI continues to function as a product supplier to the world, with cargoes fixing to a broad set of discharge destinations. Pacific Indigo fully fixed loading Sikka for AUS/NZ at 392.5 WS for an 8-10 May laycan; a direct reflection of the sustained post-conflict demand to resupply Pacific markets. Torm Astrid fixed loading Sikka for East Africa at 420 WS for 13 May with a ULSD cargo, one of the highest-earning routes in this week’s programme. PM Duke was placed on subs loading Sikka for USWC at $3.35m lumpsum for a 16 May laycan on a gasoline cargo, pointing to continued transatlantic pull from WCI loading positions.

Three naphtha fixtures into Japan emerged this week: Gran Couva fully fixed loading Mumbai for Japan at 317.5 WS for 10-11 May, Hafnia Cheetah fixed loading Chennai for Japan at 327.5 WS for 10 May, and FPMC 30 placed on subs loading Mumbai for Japan at 315 WS for 19-20 May. The uptick in naphtha-to-Japan fixtures reflects the broader pull of Asian petrochemical demand for WCI feeds.

The forward arb picture out of Sikka is a market of fluctuating margins rather than firmly open traditional arb routes. Sikka to Singapore diesel fluctuates either side of flat, with May at -$0.35/bbl and June at -$2.50/bbl; marginally closed but not decisively so. Sikka to Durban follows a similar pattern, with June turning briefly positive at +$0.20/bbl before dipping negative across the remainder of the curve.

Singapore middle distillate stocks are at multi-month highs while ARA stocks sit at multi-month lows; a combination that reflects Asia loosening versus a structurally tighter Europe. The Singapore-to-Europe spread has softened approximately $40/t since 30 April, not because European urgency has increased but because Asian supply has improved.

Korean and Taiwanese refiners have sold more May-loading diesel and jet cargoes than in April, and Korea has secured over 85% of its normal monthly crude requirement for May, reducing the risk of run cuts. The tightness of the European supply picture relative to Asia means that WCI barrels remain a potential relief valve for Europe should pricing adjust.

With vessel supply at less than half the trailing average and incremental demand strong, the FSD model is firmly bullish and the floor for TC12 rates looks well established. The breadth of fixtures across East Africa, AUS/NZ, Japan naphtha, USWC gasoline, and an improving Sikka-to-Europe arb reflects a market where WCI product demand is being pulled in multiple directions simultaneously, limiting the risk of any one arb closing. Owners are well positioned to push above last done levels.

About the Author
Michael Ryan, our Freight Commodity Owner at Sparta, brings over a decade of experience with Trafigura in the energy sector managing risk across products and regions before becoming Head of Risk for subsidiary Puma Energy. Michael then joined the Trafigura commercial team trading freight while successfully growing the physical fleet through strategic dealmaking.
Connect: https://www.linkedin.com/in/mgryan/ 

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