Impact of Dangote Refinery And Global Trade Dynamics


The long-awaited change in the product tanker market due to the 650kbd Dangote refinery start-up appears to be approaching. The refinery imported its first crude cargo in December last year and over the past three months, imports averaged between 230kbd and 310kbd, mainly consisting of Nigerian grades, supplemented by US barrels. The refinery has also started exporting clean and dirty products in March, with volumes reaching 290kbd in May, according to Kepler. Dirty petroleum products are finding a home primarily in the US, whilst some barrels have also been shipped into Europe and Singapore. The vast majority of exported naphtha is destined for Asia, the straight run gasoil/diesel is almost entirely staying local, whilst the jet fuel is redistributed into West/North Africa as well as Latin America, and with limited volumes shipped into NW Europe, reports Gibson.

A Lot of Moving Parts

Recently, Argus reported that Nigeria’s downstream regulator NMDPRA has indicated that the refinery has now received approval to start its residual fluid catalytic cracker, which upgrades heavy feedstock into lighter products, such as gasoline. Furthermore, Dangote’s vice president for oil and gas also has stated that the company expects to start sales of gasoline in June and anticipates beginning exports of 10 ppm diesel.

However, full operations could still be some time off, with naphtha exports, needed as a feedstock for finished gasoline, remaining strong in May. Any major changes to these flows will offer a clue as to how fast Dangote is bringing its secondary units online. For now, general expectations are that the refinery will start meaningfully impacting the clean tanker market in Q4 2024/Q1 2025 but as always there are a lot of moving parts.

On its own, the anticipated decline in West African gasoline imports, when Dangote is fully up and running, will reduce demand not just for MRs but for larger LRs as well. Volume-wise, over 60% of all Nigerian gasoline imports over the past two years have been carried on LR2s and LR1s. Faced with reduced trading opportunities West, this will inevitably increase Middle East LR availability.

Whilst the refinery is geared up to maximize gasoline production, it will still be producing sizable volumes of gasoil and jet. For now, products are mainly staying local, but Dangote’s high-spec diesel and jet could find a natural home in Europe. Although it will create “new” clean tanker tonne miles, many of these barrels will be a backhaul cargo into Europe for tankers that will continue to move products into the rest of West Africa, so essentially not adding much new vessel demand. Furthermore, if we do indeed see Dangote trading into Europe, then East of Suez/Europe flows could come under downward pressure and that will have a more profound effect on the overall clean tanker market due to the distances traveled. The same logic applies to TC14 flows.

The biggest question, however, is vulnerability of European refineries, which will struggle to find a new home for the gasoline they will no longer export to Nigeria. Possibly a bit more could flow into the US Atlantic Coast but the prospects for demand growth here are bleak. Some extra barrels could also be exported into Latin America, although here they will need to compete with Russian and US products. Already, over 600kbd of European refining capacity is earmarked to close between 2025 and 2027. The prospects for European demand are also uncertain but if refinery closures lead to growing European distillates intake, then there is an argument that further gains in East of Suez and USG flows into Europe will offset for the upcoming decline in CPP imports into West Africa.

Crude Oil

Middle East

VLCC rates have plummeted towards yearly lows as the lack of activity combined with the conference in Athens brought about a pessimistic mood which is likely to carry over into next week. There was further gloom as OPEC cuts are being maintained so we could be some way off a rebound although we might be close to the bottom of this current downturn. Today we are calling a 270,000mt AG/China run at ws 53 and 280,000mt AG/USG is now at the ws 35 level.

The AG Suezmax market remains steady with the majority of enquiry on Fuel oil runs heading West. Despite the steady sentiment the list looks set to open up next week where Charterers will surely test Owners’ resolve, we’d expect TD23 to pay around 140,000mt x ws 80 via the cape. Looking east the market remains on the firmer side but continues to be capped by the VLCC with a standard run sitting at around ws 135 to head East.

Aframax sentiment in the East showed signs of softening for the first time in weeks as Charterers welcomed blasters from the Indo region to replenish a tonnage list that has not offered many options. AG/Red Sea runs dominated the activity this week despite much of it being fixed under the radar. AG/East is now expected to achieve 80,000mt x ws 202.5 however with Posidonia out of the way and all returning to their desks, fresh tests should be on the cards next week.

West Africa

VLCC inquiry levels remained very low in WAF and freight levels have been following other areas as ships who began the ballast Westwards struggle to find employment with sentiment is weakening by the day. We may see some recovery next week as Charterers move to cover early July stems but they look to have the upper hand with a healthy choice of tonnage availability. In today’s market, we estimate that the current rate for WAF/China should be around the ws 59 level.

A quiet week in the West Africa region on the Suezmaxes this week where rates have been chipped away despite this, Owners hold onto a bullish sentiment as across-the-pond rates continue to push above last-done levels. With Posidonia coming to a close, Suezmax Owners are hoping for more inquiry next week. for TD20 today we estimate this today at 130,000mt x ws 107.5.


TD6 remains steady for the current working window where there are still ships that would look to fix away in this region. The list will get re-stocked by next week where Owners will look to hold onto last done levels. For a standard run, we expect 135,000mt x ws 125 to be paid. Rates to head East have remained steady throughout this week. Rates are around $5.5M for Libya/Ningbo via the Cape.

There is no denying that the disruptions of Posidonia were felt this year for the Mediterranean Aframax market, with the first half of the week showing little opportunity for owners to get their teeth into. Once offices across the shipping community looked a little more populated, activity did start to pick up however sentiment had shifted noticeably with fixing levels dropping off, which in turn has undone a lot of Owners’ recent achievements. This said, approaching the weekend the market appears to be settling in the ws 180’s for a typical XMed voyage, and with UKC firming and US markets tightening, expectation grows that we are nearing the floor on this cycle.

US Gulf/Latin America

It has been a challenging week for Owners here as US exports seem to have declined and rates continue on their downward trajectory. We have also seen a plethora of ships fail which always hits Owners confidence and we enter the weekend in a bearish mood. Brazil exports remained steady while rates have followed the pattern in WAF with Charterers able to fix below last done. We expect a USG/ China run will fix in the region of $8.55M while we estimate a Brazil/China run is paying around the WS 57  level.

North Sea

The North has made somewhat of a resurgence this week building off the back of a tighter list and inquiry volumes going up at the start of the week. We seem to have found somewhat of an equilibrium now and levels should hold here in the near term. Levels sit firm around ws 172.5.

Clean Products


As the Posidonia week comes to a close, the shipping market looks to reset and take stock (and catch up on sleep!). Several off-market deals being done over the week will be surfacing over the weekend, but with TC1 going on subs last night at 75,000mt x ws 195 a reset will be coming for the LR2s next week for sure. AG/UKC will need to adjust accordingly and circa $5.9M-$6.0M could be where it’s heading. A lot will depend on whether the clean-up units coming into play are workable and if Charterers can use them to drive rates down. The LR1s have been quietly active and the front end has had a solid clear out. With TC5 being done a few times at 55,000mt x ws 247.5 Owners were hoping this was the building blocks to move forward, but with the dip on TC1 and EAFR on subs at 60,000mt x ws 220 we could see TC5 drop below 55,000mt x ws 240. AG/West sits in the $4.7M-$4.8M levels. However, it will be interesting to see how much pressure the LR1s see due to the larger segment, but, as we have seen in the past, LR1 Owners are historically stubborn.

The MRs are flatlining after the earlier drop in the week but will be buoyed by a busier Far East market limiting the number of ballasters this week. A struggling LR market will have a few worried, but the MRs should trade flat on their own. Earnings are still well within the $ 40k-a-day level, so despite the overall drop from last Friday, Owners aren’t too unhappy.

The North Asia MR market continued to be busy and a big spike finally came with numerous and varied cargo rushing into the market. The benchmark Korea/Spore run jumped $400k to $1.35M and SK/Oz runs were up to ws 345 accordingly. The increased MR volume may have something to do with the decreased LR volume. The Northern market was so strong that it was pulling the ships from the Straits and every ECOZ open ship was now signaling the North. The Strait stayed busy too with short haul runs enjoying very good returns while Thailand/Spore went on sub at $800k, but TC7 only improved 7.5 points to ws 325. The Far East market over-performed compared to the AG this week so some ships that were on the way to AG even considered a quick U-turn back to Far East again.


It was a tough week for the Handy Owners here in the Mediterranean with rates taking a big tumble from the off. Lists pulled Monday morning showed an ample amount of tonnage and combined with many being at Posidonia it was always going to be a softening combination. 30,000mt x ws 280 was last done XMed on the prior Friday night but this soon dropped to 30,000mt x ws 227.5 by Monday night. Fast-forward to the present and we see XMed trading at the 30,000mt x ws 215 mark with BSea/Med in need of a fresh negative test. Heading into the weekend there isn’t a great deal of cargo left to cover so it wouldn’t be surprising to see a further slip before COB however we do expect it to be busier next week enquiry-wise with many returning to their desks after a sunny week in Athens.

Finally, the Med MR market which it has been quiet throughout the week. The fresh inquiry has been lacking and as a result, Med sentiment has been driven by a crumbling TC2 market. After TC2 slipped to 37,000mt x ws 170 on Wednesday we finally saw a fresh test in the Med with 37,000mt x ws 205 achieved for a Med/UKC run which tracks in line with TA. Since then Med has not received another test but with TC2 now even weaker at 37,000mt x ws 140 the writing is on the wall. Further negative corrections are to come here as we approach the weekend.

UK Continent 

Supply has heavily outweighed demand this week for Handys in the north as limited fixing opportunities have been on offer for Owners here. By the end of the week, freight closes at 30,000mt x ws 180 for XUKC, and with the MR sector also collapsing this week this will not help handy sentiment either for the short term. Pressured.

Unsurprisingly Posidonia week really took a toll on this UKC MR market with very few quoted stems for the majority of the week, and once tonnage lists were pulled on Monday, the weight of excess tonnage was unmanageable. For the first half of the week, it was clear that the market was to soften, but to what extent? and it was only late on Thursday that the 37,000mt x ws 155 reared its ugly head for TC2. This has subsequently been knocked again and a couple of fresh tests this morning see TA now sitting at 37,000mt x ws 145 and the quieter WAF runs are expected to sit 20-25 points above. We do find a few ships on subs come COB but there are still a couple of weaker targets available for Charterers and we can still potentially see a couple more points to be shaved off this market before hitting the floor.

Dirty Products


Activity in both The North and Med was slow to take off this week due to the shipping industry descending on Athens for Posidonia. The few fixtures carried out early in the north were very much under the radar with little information shared with the market. That said, the expected firming soon materialized with ws 285 fixed and further firming expected. Tonnage remained tight with few naturally positioned units showing on the list before mid-month and owners will hope it stays that way as we look to next week.

In The Med, the Posidonia hangovers had worn off by Thursday as a flurry of vessels were chipped away from what was beginning to look like a lengthier list. Levels softened with ws 290 reported on subs by week’s end. Looking ahead to next week, Owners will hope to see inquiry get off to a fast start to keep the negative pressure at bay as sentiment shifts to a softening market.


Not the week MR owners would have been hoping for basis full stem or for part cargoes in The North. Activity across each sizing was slow to surface. However, few vessels would have been able to meet demand, due to a lack of naturally positioned units. Leaving a well-publicized test required to truly determine levels.

The Med saw the better of full stem cargoes with ws 205 reported on subs by midweek. As usual, units have been chipped away for part cargoes, tightening the list as the week went on. Owners will be hoping for inquiry to surface quickly to capitalize on the current lack of tonnage.


A busier week for Panamaxes as a firm inquiry for UKC/TA finally arrived with ws 142.5 reported to have failed subs, just 2.5 points shy of last done levels. However, a new benchmark on which to measure future trades has been determined. Caribs/USG runs have seen a continuous downward trend due to ample tonnage and drip-fed inquiry. However, levels may soon find its floor and start to rebound due to support from a tight surrounding Afra market leaving Panamax tonnage looking like the more viable option.

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Source: Gibson


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