Trafigura has long been known as one of the largest global commodities traders, but the name was little known among U.S. jobbers and downstream marketers until this year. That is now changing thanks to an aggressive but "under the radar" expansion at about 40 terminals in mostly East Coast and Gulf Coast geography.

Marketers say that Trafigura has quietly become a critical unbranded gasoline and diesel supplier along the Colonial and Plantation Pipelines as well as in Florida, and some other waterborne supply points. In fact, some chains tell OPIS that Trafigura regularly competes against Pilot Flying J subsidiary Saratoga and RaceTrac affiliate Metroplex with a lot of action on days when NYMEX futures volatility renders posted prices somewhat anachronistic.

Trafigura is incredibly well capitalized. The company posted revenue of some $171.5 billion last year across a number of commodities, including crude oil, refined products, NGLs, and LNG. The private company touts its prowess in using market knowledge, logistics and global resources to move physical commodities where and when they are needed.

Like other huge international trading conglomerates, Trafigura's actual profit margins are small. The 2019 year saw gross profits of only 1.7%, but observers say that thin margin is consistent with what many companies see in the purchase-and-resell rack business. The scale of the petroleum business is what can make it worthwhile. Trafigura's website boasts of worldwide volumes of 218 million bbl of gasoline last year; with 267 million bbl of distillate; as well as 88 million bbl of LPG and 4 million bbl of biodiesel. No country-specific numbers are given.

Having rack outlets for the gasoline, diesel and biofuel that the company trades in cargoes, barges, or pipeline parcels is also a critical hedge for the trading business. There have even been reports that Trafigura has gone after some of the massive bulk business of Costco or Sam's Club in some regions.

Having a high-volume customer for gasoline (or diesel) can offset mistakes or miscalculations in bulk trades, observers say.

For now, marketers say that Trafigura's downstream rack specialty is deals tied to NYMEX futures. Each morning, they will quote a differential (plus or minus) to NYMEX RBOB or ultra-low-sulfur diesel (ULSD) for rack barrels they provide via throughputs or exchanges with a half dozen or so companies. Trafigura refers to these basis differentials as "triggers."

The sales are handled out of the company's Houston-based office, but ironically, OPIS could not confirm any rack sales in the Lone Star state.

Trafigura as a rack seller pops up in Opelousas, La. and in most contiguous coastal states up to New York. Product is provided at terminals operated by Buckeye, CITGO, Delek, Kinder Morgan, Magellan, Sunoco and others, and sources have told OPIS they believe Trafigura's intent may be to expand its footprint beyond the Southeast, East Coast, and Tennessee.

There have been numerous instances where Trafigura was willing to package wholesale E15 for sale in some of these markets, sources have told OPIS, although such offers were more common when ethanol prices were well beneath CBOB and RBOB markets.

Trafigura did not return queries from OPIS on this rack effort, but marketers say the company will move gasoline and diesel on a load-to-load basis or via bulk book transfers at terminals.

Here is a list of locations (and terminal operators) where sources say Trafigura is believed to have various grades of gasoline and diesel:

  • Opelousas, La. (Buckeye);
  • Meridian, Miss. (Murphy);
  • Birmingham (Buckeye) and Montgomery, Ala. (Buckeye,  Murphy);
  • Tampa (Buckeye), Port Everglades (Buckeye) and Orlando (Kinder Morgan) Fla.;
  • Albany (Magellan), Athens (Kinder Morgan), Chattahoochee (Kinder Morgan); Columbus (Omega), Doraville (Magellan), and Macon (Vecenergy, Magellan) Ga.; 
  • Belton (Buckeye), North Augusta (Buckeye), and Spartanburg (CITGO) S.C.; 
  • Greensboro (Magellan), Charlotte (CITGO) and Selma (Magellan, CITGO) N.C.;
  • Knoxville (Kinder Morgan, CITGO) and Nashville (Delek), Tenn.;
  • Chesapeake (Buckeye), Norfolk (Arc), Richmond (Buckeye, CITGO ) and Fairfax (Buckeye, CITGO), Va.;
  • Baltimore (Buckeye, CITGO) Md.;
  • Philadelphia (Sunoco) Pa.;
  • Port Reading (Buckeye) N.J.;
  • Buffalo (Buckeye), Rochester (Buckeye, Sunoco), Syracuse (Buckeye), and Tonawanda (Sunoco), N.Y.

 

--Reporting by Tom Kloza, tkloza@opisnet.com ;

--Editing by Beth Heinsohn, bheinsohn@opisnet.com

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