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Weekly Summary

Products: May 11-15: Naphtha market in contango going forward


The differential for MR-size cargoes of 92RON gasoline on an FOB China basis swelled on increasing demand. Some spot purchases were heard from Southeast Asia. On Tuesday, Petrolimex in Vietnam closed a buy tender for two MR-size cargoes of 95RON and either 90RON or 92RON gasoline to be loaded in May and June. On the same day, Petron in the Philippines also closed a buy tender for 200,000bbl of 87RON gasoline and 100,000bbl of 92RON gasoline loading on Jun 5-10. On the supply side, on Tuesday, a refiner in China sold an MR-size cargo of 92RON gasoline loading on Jun 6-7 from South China at a discount of $1.90/bbl to Singapore quotations on an FOB basis.


In Japan, Mitsubishi Chemical was scheduled to conduct regular maintenance of its Kashima plant in East Japan in May, while Maruzen Petrochemical was planning planned maintenance activities of its Chiba plant near Tokyo from May to July. Mitsui Chemical was also scheduled to have regular maintenance of its Osaka plant from June to July. Therefore, a petrochemical company in Northeast Asia said that demand for naphtha would decline from May to July. In Asia, intermonth spread of naphtha was in backwardation in the prompt month, but was in contango going forward.


The differentials for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis were up on tight supply. Spot supply for cargoes loading in June from Northeast Asia was declining due to regular maintenance or production cuts at refineries. In China, exports in June seemed to be also limited due to high prices at home. Refiners in Japan were reluctant to export in June due to limited availability. Meanwhile, this week, a refiner in South Korea sold two MR-size cargoes of 0.001% sulfur gasoil loading in June at a discount of 85cts/bbl and at a discount of $1.35/bbl to Singapore quotations on an FOB basis. The price differed based on their laycan.


The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis stayed intact. However, SK Energy started the full-fledged operation of its vacuum residuum desulfurization unit, and supply of 0.5% sulfur fuel oil was increasing. In addition, demand in South Korea and China was expected to be weakening due to economic slowdown as the second wave of the outbreak of COVID-19 would take place. Those capped the market. Meanwhile, due to the recent high freight rates, the volume of arbitrage cargoes into Asia from regions outside of Asia was declining. The volume was expected to be at around 3.00 mil metric tons in May, down from 4.00 mil mt in April. In Singapore, a trading hub of oil products in Asia, the differential for 0.5% sulfur fuel oil slightly rebounded, and the intermonth spread stayed in contango. As demand was gradually recovering, prices going forward were expected to increase.

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Tokyo : Products Team  Yokoi   +81-3-3552-2411Copyright © RIM Intelligence Co. ALL RIGHTS RESERVED.