Europe gasoline cargoes find home in Latin America as U.S. demand slows
* Volumes nearly double in July from previous months
* Cargoes head to Mexico, Brazil, Argentina, Ecuador and Chile
* As U.S. arbitrage shrinks, Latam may become new destination
LONDON, July 11 (Reuters) - Gasoline flows from Europe to Latin America have already nearly doubled in July compared with recent months as a slump in demand in Europe and U.S. markets force traders to look elsewhere for opportunities.
The rise in trade on this transatlantic route is seen as an indication of changing flows out of Europe as the traditional U.S. East Coast export destination draws less volume.
A string of outages at large regional refineries, including Venezuela's 645,000 barrel per day (bpd) Amuay and Argentina's 180,000 bpd La Platta, have limited supplies in recent months and opened the transatlantic arbitrage window. .
At least nine gasoline tankers, each hauling 37,000 tonne loads, have been booked so far in July from Europe to Mexico, Brazil, Argentina, Ecuador and Chile, according to traders and shipping data.
That contrasts with an average of four to five cargoes shipped monthly in the previous six months of the year.
"The barrels need an outlet," a trader that operates on the route said. "With the East Coast arbitrage not open, we just had to supply elsewhere."
While the closer U.S. Gulf Coast refineries remain the main suppliers of oil products to Latin America, high European inventories and unusually low demand have meant traders are ready to bet on the new route.
"Demand from the U.S. is weak and West Africa can only absorb limited amounts, so Latin America seems like the most natural target," another trader said.
Trade with the U.S. East Coast, the largest overseas outlet for European gasoline, has been closed in recent weeks as a result of record-high U.S. stocks and declining demand in what has traditionally been a period of increased activity due to the summer driving season.
Gasoline imports to the East Coast stood at a four-week average of 545,000 barrels per day (bpd) in the week ending July 5, down some 33 percent from 815,000 bpd in the same week a year earlier, according to the U.S. Energy Information Administration.
"Whilst South America's refining capacity remains in deficit, the anticipated increased demand for imports of refined products suggests shipping demand in this region will continue to grow over the next few years," broker E.A. Gibson said.
With Europe over-supplied with gasoline and U.S. demand steadily declining in recent years, Latin America could become a permanent trade destination for European gasoline.
"For product tankers, the gasoline-arbitrage motorway TC2, Rotterdam-New York, is one which may see less limelight in future, whereas distillate trades from the U.S. Gulf to Latin and South America may attract even more attention than they already do today," said Peter Sand, chief shipping analyst with trade association BIMCO.
(Editing by Pravin Char)