Asia turns to US for gasoline

As European tanks run low, China seeks reformates

Asia has turned to the US for supplies of gasoline blending components as tanks in Europe run dry.

A rare cargo of mixed aromatics, also known as ‘‘reformates’’, set sail from the US East Coast last week and will head to China after stopping in Europe, according to Reuters shipping data and four traders familiar with the matter.

The vessel, Yankul Silver, is carrying about 300,000 barrels of reformate and is currently on its way to Amsterdam, the Netherlands. Another vessel from the US Gulf Coast was also seen hauling reformate to Asia, two traders said.

Reformates are used by China to upgrade gasoline produced in refineries, helping to meet increasingly stringent government fuel requirements to fight air pollution.

China has imported large volumes of mixed aromatics in recent weeks due to a supply shortage out of Europe. Reformate exports from the US East Coast are unusual as the region also typically imports from Northern Europe.

European exports of mixed aromatics to Asia rose nearly fivefold in October to over 800,000 tons from the previous month. However, traders said there is not enough produce left in European storage tanks to meet upcoming demand.

Demand for reformate cargoes from the Amsterdam-Rotterdam-Antwerp region to China has slowed recently, according to traders.

The window to profitably sell reformate has opened toward the end of this year, as Chinese traders scooped up European barrels ahead of anticipated changes in import tariffs and regulations in the new year.

China in May also planned to impose consumption taxes on oil byproducts such as mixed aromatics, but no official announcement was made. Traders said they now expect changes to take effect by early 2018.

“Europe has sold out of mixed aromatics,” one East Coast trader said. “And the world’s pricing region for gasoline [the US East Coast] is now being forced to backfill sales to China.”