Nigerian fuel importers are experiencing increased pressure as climbing global petrol prices and elevated freight costs raise the expense of importing products, while the pricing set by Dangote Petroleum Refinery further restricts import possibilities, as stated in a recent market report.
The most recent Daily Refined Products Commentary from S&P Global Commodity Insights noted that market participants voiced worries about increased flat prices, as traders highlighted the influence of the Dangote refinery’s pricing on Nigeria’s import market.
The report indicated that a trader mentioned that Ghanaian-specification petrol premiums exceeded those of Nigerian-specification petrol due to pricing limits in Nigeria, stating that prices are “capped by Dangote prices.”
The report noted that gasoline prices in Lomé surpassed the sales prices of the Dangote refinery, thereby removing arbitrage possibilities into Nigeria. It mentioned, “Lome prices have increased beyond Dangote selling prices, which has ‘closed the arbitrage’, although this isn’t necessarily true in Ghana.”
Despite expectations among traders for a rise in the Dangote refinery’s coastal sales price, the report indicated that the company maintained its pricing, although the recent dollar pricing may influence costs.
“The report noted that while traders anticipated a price increase from Dangote, the coastal sales price stayed the same compared to the previous day,” according two market participants.
The report also emphasized increasing freight expenses as an additional source of strain for importers. It reported that shipping rates for carrying petroleum products from Europe to West Africa had risen as ships were repositioned, with Platts, a division of S&P Global Commodity Insights, evaluating the Clean UKC-West Africa 37,000-metric-tonne freight rate at $37.12 per metric tonne, an increase from $29.70 per metric tonne on June 30.
The report indicated that diminished access to Russian Black Sea products in the diesel market was driving up the cost of high-sulphur gasoil in West Africa and maintaining a tight sulphur spread.
It noted that Platts evaluated the gasoline FOB West Africa price at $1,053 per metric tonne, while the STS Lomé evaluation was at $1,078 per metric tonne, reflecting a $58-per-metric-tonne premium over Eurobob balmo.
The report additionally evaluated FOB cargoes from Northwest Europe to West Africa at $1,005 per metric tonne, resulting in a CIF net forward value of $1,042.25 per metric tonne.
The STS Lomé price for diesel was evaluated at $1,173.50 per metric tonne, whereas the FOB West Africa diesel price was evaluated at $1,233.50 per metric tonne.
The report indicates that if international fuel prices and freight rates do not decrease or domestic pricing does not change, Nigerian fuel importers could encounter narrower margins, with the pricing of the Dangote refinery being a crucial element influencing import economics in the nation’s petrol market.
