* Two tankers ship diesel in rarely used route
* Move highlights Brazil’s struggling economy, traders say (Adds third cargo, analyst comment)
By Ron Bousso
LONDON, May 9 (Reuters) - Brazil has joined a list of countries exporting diesel to Europe, reversing a traditional route and underscoring a weakening of the largest South American economy.
At least three 37,000 tonne cargoes of diesel, on the tankers Torm Gunhild, High Performance and MT Alexandros, have sailed in recent weeks from Brazil to Europe, according to Reuters ship tracking data and traders.
Torm Gunhild is heading to Venice and is chartered by Italian oil company Eni while MT Alexandros has been chartered by trading house Glencore and is set to discharge in the Canary Islands.
High Performance, chartered by BP, is currently crossing the Atlantic after sailing from the U.S. Gulf Coast to Brazil in mid-April before being redirected when it was off Brazil’s coast, according to ship tracking data.
Traders linked the rare arbitrage to Brazil’s economy, which has struggled with a deepening recession in recent years. Its economic output fell 3.8 percent in 2015 and is expected to decline by the same amount in 2016, according to the International Monetary Fund.
According to trade sources, one of the cargoes loaded distillates off the coast of Brazil from a vessel that originated at India’s Reliance oil refinery.
Diesel consumption in Brazil, which imports much of its needs from the United States, Asia and, at times, Europe, has also been on a steady decline.
The move could also be linked to the ramping up of Brazil’s refineries, according to Robert Campbell, head of oil products research at consultancy Energy Aspects.
“The Brazilian economy is doing poorly but refinery runs have also been below capacity for a while now so if they push these up they would sharply reduce the requirement for diesel imports,” Campbell said.
(GRAPHIC: Brazil's gasoline and diesel sales tmsnrt.rs/1WNIMUh)
Europe is the world’s main hub for diesel due its heavy use. A sharp increase in diesel refining capacity around the world has led over the past year to a sharp increase in supply, in Europe in particular, putting heavy pressure on diesel refining margins.
France’s Total is offering to sell a 270,000 tonne cargo of diesel into Europe, which would be the largest cargo ever sold in the region, according to traders.
Additional reporting by Libby George, editing by William Hardy and Jane Merriman