Rising petrol prices tighten margins for fuel importers

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Nigerian fuel importers are facing renewed pressure as rising international petrol prices and higher freight costs increase the cost of bringing products into the country, while the Dangote Petroleum Refinery’s pricing continues to limit import opportunities, according to a new market report.

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The latest Daily Refined Products Commentary by S&P Global Commodity Insights said market participants expressed concern over higher flat prices, with traders pointing to the impact of the Dangote refinery’s pricing on Nigeria’s import market.

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According to the report, a trader said premiums for Ghanaian-specification petrol were higher than for Nigerian-specification petrol because prices in Nigeria are constrained by the refinery’s pricing, saying prices are “capped by Dangote prices”.

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The report added that gasoline prices in Lomé had climbed above the Dangote refinery’s sales prices, effectively eliminating arbitrage opportunities into Nigeria. It stated, “Lome values have risen above Dangote sales prices, which has ‘shut the arbitrage’, but this is not necessarily the case in Ghana.”

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Although traders had anticipated an increase in the Dangote refinery’s coastal sales price, the report said the company kept its prices unchanged, though the newly introduced dollar pricing may affect prices.

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“Although traders expected a Dangote price hike, the coastal sales price remained unchanged day over day,” the report said, citing two market participants.

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The report also highlighted rising freight costs as another source of pressure for importers. It said freight rates for transporting petroleum products from Europe to West Africa had increased as vessels repositioned, with Platts, part of S&P Global Commodity Insights, assessing the Clean UKC-West Africa 37,000-metric-tonne freight rate at $37.12 per metric tonne, up from $29.70 per metric tonne on June 30.

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In the diesel market, the report said reduced availability of Russian Black Sea products was making high-sulphur gasoil more expensive in West Africa and keeping the sulphur spread narrow.

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It added that Platts assessed the gasoline FOB West Africa price at $1,053 per metric tonne, while the STS Lomé assessment stood at $1,078 per metric tonne, representing a $58-per-metric-tonne premium to Eurobob balmo.

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The report further assessed FOB Northwest Europe-West Africa cargoes at $1,005 per metric tonne, with a CIF net forward value of $1,042.25 per metric tonne.

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For diesel, the STS Lomé price was assessed at $1,173.50 per metric tonne, while the FOB West Africa diesel price was assessed at $1,233.50 per metric tonne.

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The report suggests that unless international fuel prices and freight rates ease or domestic pricing adjusts, Nigerian fuel importers may continue to face tighter margins, with the Dangote refinery’s pricing remaining a key factor shaping import economics in the country’s petrol market.

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