Six vessels load Russian diesel from Baltic port and head to Germany, UK

Quantum Commodity Intelligence - Six vessels have loaded ultra-low sulfur diesel (ULSD) from the Russian Baltic port of Primorsk in March, with two on their way to Germany and the other four on their way to the UK, sources and ship-tracking technology showed Monday.

None of the vessels, all carrying 33,000 mt of ULSD, have yet to reach their destination.

But the first vessel to load, the Seasprat, looks close to reaching Bremen in Germany.

Dockworkers in the Thames Estuary in the UK refused to unload two cargoes of Russian LNG on Friday, even though the vessels were not Russian flagged and should have been excluded from the shipping ban issued by the UK's Department of Transport.

But Germany, the UK and Holland have all ruled out banning oil and gas exports from Russia.  

"(The diesel) It's got to load, it's finding a home is the tricky part," said one broker.

"Primorsk does not have the ability to store it all."

Another vessel, the Hafnia Sunda, also looks to be heading to Germany, although to the port of Hamburg.

Four vessels were heading to the UK.

Three vessels – Atlantic Bell, STI Wembley, and Baltic Mariner – have the Thames as a final destination.

The other vessel, STI Camden, looks to be heading for Immingham in the UK.

Diesel futures in Europe have spiked amid fears of a shortage of ultra-low sulfur diesel, even though energy flows from Russia have not been sanctioned following the invasion of Ukraine.

March low sulfur gasoil futures were trading at a multi-year high of $1294.25/mt by 1630 GMT Friday, up $109.50/mt from the same time Friday, while the backwardation to April low sulfur gasoil futures stretched to $97.75/mt. 

A buyer was seen looking for a cargo of ULSD into Antwerp at flat to March low sulfur gasoil futures, arriving March 17-21, after the expiry of the front month future. 

Although Russia's March Baltic programme, which is scheduled to hit 1.477 million mt over the month, has started to flow, refining costs in Europe have roofed to add to the diesel tightness.

April TTF futures were last trading at €230/MWh, although earlier hit €340/MWh, sending the cost of hydrotreating, which uses hydrogen from natural gas to strip out sulfur from diesel to make ULSD, jumping.

Refiners are also struggling to source vacuum gasoil from Russia, one of the key feedstocks for producing diesel, sources added.