Products: Feb 3-7: 0.5%S FO wanes on slowdowns in sea transportations
The differential for MR-size cargoes of 92RON gasoline on an FOB China basis was unchanged. Deals for cargoes loading in March took place. On Thursday, CPC Co in Taiwan sold an MR-size cargo of 92RON gasoline loading in March at a premium of over $1.50/bbl to Singapore quotations on an FOB basis. However, most bids from participants of the tender seemed to have been at a premium of below $1.00/bbl to the quotations. Meanwhile, no spot cargoes loading in March were still heard from China and South Korea.
On the back of influence on the outbreak of new pneumonia, independent refineries in Shandong province of China pulled down its run rates by 30~50%. In addition to Sinopec, reducing crude throughput in Chinese refineries tightened supply side and would improve refining margins. Further, disruptions for trades lowered the freight, and some expect that supply would soon recover. On the other hand, demand side was perceived to be weaker as coming into turnaround seasons for Asian crackers, slumps in demand for gasoline and diesel in China, and weakness in petrochemical demand in whole Asia would recede forward prices for naphtha as the feedstocks.
The differential for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis stayed flat. No deals for cargoes loading in March were still heard. Due to pneumonia caused by the new coronavirus in China, market players stayed in a wait-and-see stance. In South Korea, one refiner was possibly going to skip spot sales for cargoes loading in March. Formosa Petrochemicals Co in Taiwan would skip spot sales of middle distillates due to regular maintenance of its refinery. In China, refiners tended to increase exports on the back of declining demand at home. On Tuesday, one refiner made moves to sell an MR-size cargo of 0.001% sulfur gasoil loading from South China at the end of February, but the deal had yet to be confirmed.
The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis dipped as buying interest was withdrawn by market players due to a slowdown in seaborne transportations amid a risk-off mood on the back of spreading new pneumonia centered Asia. Exports for VLSFO from China also decreased. JXTG Nippon Oil & Energy and Cosmo Oil tried to sell VLSFO to China, but the buyers were not found. In Singapore as the hub of Asian markets, VLSFO stocks which have piled up for responding to the stricter sulfur regulations of marine fuel by International Marine Organization (IMO) could not digest.