Gasoline: Wait-and-see mode lingers for Sep cargoes

The differentials for MR-size cargos of 92RON gasoline on an FOB Northeast Asia basis were unchanged from Aug 2. The spot market remained at a standstill as market players stayed in a wait-and-see stance. Refiners in China and South Korea were focusing to see their country's political decision regarding the oil market, so that they were likely to curtail their exports of September loading cargoes for the time being. In South Korea, the government was reportedly scheduled to finish the tax benefit on oil products to the original level at the end of August, and its final decision was expected to be made next week. In China, it was still unclear when the third export quotas of oil products would be announced, so that refiners in the country had a hard time deciding their export schedules in September.

In Taiwan, CPC Co moved on a purchase of an MR-size cargo of 95RON gasoline for delivery in September via a tender. The company had shut down the 80,000b/d residue fluid catalytic cracker at its 350,000b/d Talin refinery. The company had aimed to restart it from the end of July to early August, but postponed it to late August.

Naphtha: OSN cargo for delivery on Sep 14-28 traded in high single digit premium

Open-spec naphtha prices on a CFR Japan basis rebounded compared to Aug 2. The arbitrage cargoes were reportedly decreasing. In the meantime, a market source showed a view that procurements might be increasing because the market prices had temporarily declined at around flat and purchases became intensive.

One petrochemical company in Japan bought 25,000mt of open-spec naphtha for delivery to Chiba on Sep 14-28 via a tender. The awarded price was in the high single digit premium to Japan quotations on a CFR basis.

Idemitsu Kosan in Japan planned to resume its naphtha cracker in Tokuyama last three-day holidays. The oil company was also scheduled to start regular maintenance of the naphtha cracker from early September.

Middle distillates: Full-fledged spot sales expected to start from Aug 12

The differentials for MR-size cargoes of jet fuel on an FOB Northeast Asia basis were stable on week. Fresh trades for September loading cargoes did not surface. There were no signs of full-swing sales by South Korean players, and many oil companies were likely to consider selling cargoes next week. S-Oil was expected to have regular maintenance of its refinery around September including one crude distillation unit and it was pointed out that supply of September loading cargoes from the 580,000 barrels per day Onsan refinery might decrease. The refinery was still pulling back the operation of its reformer due to a fire that hit in late July, but the shipments of middle distillate were not affected.

Fresh purchases of jet fuel by Indonesia's state-owned Pertamina did not surface, and the company bought only a small amount of gasoil as an August arrival. The 360,000 barrels per day Balikpapan refinery had resumed its operations in late July, and the operation rates appeared to be increasing since then.

In Japan, efforts to introduce sustainable aviation fuel (SAF) were gradually progressing. Idemitsu Kosan announced last Friday that its SAF production project at its Tokuyama Plant moved to FEED (Front-End Engineering & Design: basic design). The company sets a goal to supply 500,000kl per year in 2030, of which 250,000 kl will be refined at the Tokuyama Plant. The Plant is scheduled to begin productions in the fiscal year of 2028. The Plant will use HEFA technology, which uses used cooking oil and animal fat.

ENEOS, together with Itochu Corp, Japan Airlines (JAL), and other companies announced that they would conduct a demonstration test of "Scope3" environmental value trading at Narita Airport.

The differential for MR-size cargoes of 0.001% sulfur gasoil on an FOB stayed in the same level. No fresh sales for cargoes loading in September were heard in the spot market. In South Korea, the government planned to finish the tax cut policy for oil products including gasoil at the end of this month, but there were still chances that this policy could be extended. It was heard that the government would make decision next week. In the meantime, Chinese oil companies did not move on selling cargoes, it was heard. The second batch of exports quotas was running short, so that they seemed to be unable to export cargoes actively.

SK Energy in South Korea sold an MR-size cargo loading on Aug 15-17 at a discount of $1.60/bbl to the quotations on an FOB basis via a tender. This cargo was pointed out to be traded at a lower price than the current market level due to its prompt laycan.

Fuel oil: Soft LSFO demand persists in Asia

The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis remained in the level equaling to Aug. No new talks were observed for spot cargoes loading in Northeast Asia's trading hubs such as South Korea. As previously reported, most end-users and traders kept to the sidelines in the midst of anemic appetite for low sulfur fuel oil for bunkering or generating electricity.

Even in Singapore, the market underlying note was soft. Although Singapore saw the limited number of arbitrage cargoes transported from the Middle East and Europe, majority of market participants were not keen to engage in discussions, mirroring prolonged weakness in demand. So far, state-run Kuwait Petroleum Company, or known as KPC, had not issued a tender to sell 0.5%S fuel oil cargoes for loading at its 615,000 barrel-per-day Al-Zour refinery in September, pointed out an industrial source familiar with the matter. KPC was expected to issue the tender next week.