By Joy Baba-Yesufu
Nigerian fuel importers are facing mounting pressure as rising international petrol prices and higher freight costs continue to increase the cost of importing petroleum products, while the pricing strategy of the Dangote Petroleum Refinery is further narrowing opportunities for imports, according to a new market report.
The latest Daily Refined Products Commentary by S&P Global Commodity Insights said higher global flat prices and freight charges have eroded import margins, with market participants noting that the Dangote refinery’s pricing has become a key factor shaping Nigeria’s petrol import economics.
According to the report, traders said the refinery’s competitive pricing has effectively capped domestic petrol prices, limiting the profitability of imported products.
A market participant quoted in the report noted that premiums for Ghanaian-specification petrol were higher than those for Nigerian-specification products because prices in Nigeria are largely constrained by Dangote refinery’s pricing.
“Prices are capped by Dangote prices,” the trader said.
The report further stated that petrol prices in Lomé, Togo, have risen above the Dangote refinery’s sales prices, effectively closing the arbitrage window for importing fuel into Nigeria.
“Lomé values have risen above Dangote sales prices, which has shut the arbitrage, although this is not necessarily the case in Ghana,” the report stated.
Although traders had anticipated an increase in Dangote refinery’s coastal sales prices in response to rising international market conditions, S&P Global said the refinery maintained its prices unchanged during the review period.
“Although traders expected a Dangote price hike, the coastal sales price remained unchanged day over day,” the report quoted two market participants as saying.
Beyond product pricing, the report identified rising freight rates as another major challenge confronting fuel importers.
According to S&P Global Commodity Insights, freight costs for transporting refined petroleum products from Europe to West Africa have risen significantly as vessels reposition to meet changing global demand.
Platts, a division of S&P Global Commodity Insights, assessed the Clean UKC-West Africa 37,000-metric-tonne freight rate at $37.12 per metric tonne, up from $29.70 per metric tonne recorded on June 30.
The report also noted tightening conditions in the diesel market, attributing higher prices for high-sulphur gasoil in West Africa to reduced supplies from Russia’s Black Sea region.
Market assessments showed the FOB West Africa gasoline 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 over Eurobob balance-of-month prices.
Similarly, FOB Northwest Europe-West Africa cargoes were assessed at $1,005 per metric tonne, with a CIF net forward value of $1,042.25 per metric tonne.
For diesel, the report assessed the STS Lomé price at $1,173.50 per metric tonne, while the FOB West Africa diesel price stood at $1,233.50 per metric tonne.
S&P Global concluded that unless international fuel prices and freight costs ease or domestic pricing dynamics change, Nigerian fuel importers are likely to continue operating under tighter margins, with the Dangote Petroleum Refinery expected to remain the dominant influence on the country’s petrol import market.
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