The Asian gasoil margin is expected to slip in the second half of the year on the start-up of a new refinery in India adding more spot supply to the market, traders said on Monday. Indian Oil Corp has started the process of commissioning its 300,000 barrels per day (bpd) refinery at Paradip, the company said.
This could potentially increase diesel exports from India, in turn pressuring margins down in an already oversupplied market, traders said. IOC aims to start secondary units that help improve the quality of fuel in phases by end-October, the sources said. The plant on the east coast was expected to operate at 60 percent capacity between November and March.
Paradip refinery is expected to mainly cater to the markets in eastern India, currently fed by sourcing fuels from private players and other plants in northern India.
Spot demand from Indonesia limited falls in diesel margins, traders said. Indonesia's Wilmar Trading sought a gasoil cargo for June delivery. The company was last known to have bought a gasoil cargo in October for November delivery, though it could not be confirmed if it has imported any gasoil since then.
Supply from the Gulf continued to flood the east of Suez market with Abu Dhabi National Oil Company (ADNOC) continuing to offer spot diesel and jet fuel cargoes in the market.