Gasoline: Some Chinese sellers increase NOV exports before China to cut tax rebate

The differential for MR-size cargos of 91RON gasoline on an FOB Northeast Asia basis was unchanged. The Chinese government announced that it would shrink the tax rebate of value added tax on oil products from the current 13% to 9% from December. Meanwhile, some refiners in the country were increasing exports loading in November. Last week, China National Offshore Oil Co (CNOOC) sold an MR-size cargo of 92RON gasoline loading in late November from its 440,000b/d Huizhou refinery. The company also sold 12,000mt of 92RON gasoline with non-oxy grade loading from Hainan in early December. In Japan, Idemitsu Kosan shut down some secondary units at its 140,000b/d Hokkaido refinery for troubles on Sunday, and the company was investigating the cause of the troubles.

Naphtha: Prices up as demand expected to increase

The first half January open-spec naphtha prices on a CFR Japan basis went up. An expectation supported the market that demand for the first half January-delivering cargoes would recover as the new fiscal year would start.

　In South Korea, one of the main naphtha importing countries, some companies would try to reduce inventories of products in downstream and it would make naphtha demand for the second half December-delivering cargoes weak. Thus, demand for naphtha for delivery in the first half January was considered to recover in order to restock inventories. According to a source, procurements from China had temporarily retreated, but were expected to increase for January as well.

　In Vietnam, Long Son Petrochemical was shutting down its naphtha cracker from mid-October for economic issues. According to a source, the company would probably continue the shutdown during the quarter to June in 2025 if production margins would not improve. On the other hand, the company announced that it could feed ethane into the cracker in addition to naphtha and LPG by conducting construction by 2027.

　The first half January heavy grade naphtha prices on a CFR Japan basis went slightly down. Demand for the material was continued to be weak as gasoline demand season had already passed.

Middle distillates: 10ppm gasoil prices slightly down with increasing other regions cargoes

The differential for MR-size cargoes of jet fuel on an FOB Northeast Asia basis strengthened. Many South Korean oil companies were curbing their sales in the spot market as they prioritized term supply in wither and emerging domestic kerosene demand. On the other hand, supply/demand balances tightened as buying interest remained buoyant due to the marginally open arbitrage window from Asia to the US West Coast. Chinese oil companies continued to focus on sales of November loading cargoes. The government was scheduled to reduce the rebate of value added tax (VAT) rate from Dec 1, which was driving last-minute exports. The limited selling interest in December for FOB China cargoes and the market was supported.

The differential for SR-size cargoes of kerosene on an FOB South Korea basis became weaker on week. Buying interest for spot cargoes was retreating from Japan due to poor import profitability and high inventories. Buying interest by Idemitsu Kosan was limited. Some secondary units of its 140,000b/d Hokkaido refinery had been shut down after a fire that occurred around the sulfur collection unit on Nov 17. However, some pointed out that shortage of domestic supply seemed to have been filled with its inventories or imported cargoes that the company had earlier procured.

The differential for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis softened. Market sentiment was getting down as cargoes were flowing from other regions like the Middle East and India and cargoes loading in Northeast Asia and other regions were competing for demand. SK Energy in South Korea conducted a sell tender for three MR-size cargoes loading on Dec 18-20, Dec 25-27 and Dec 29-Jan 2. Formosa Petrochemical Corp (FPCC) in Taiwan continued negotiations for term sell contracts from January to December, 2025. A view was shown that gasoil markets were expected to be softer in 2025 than in 2024. In addition to expansions or starting up of refineries, a part of countries was planning to promote to use bio-fuels.

Fuel oil: HSFO prices go up amid tight supply

The differential for MR-size cargoes of 3.5% sulfur fuel oil (380cst) on an FOB South Korea basis was shrinking with less supply pressures. South Korea's oil companies still kept high sulfur fuel oil (HSFO) productions at low levels, whereas HSFO kept attracting a certain amount of demand chiefly from the bunker fuel market. Furthermore, HSFO prices generally got bullish throughout Asia as Singapore, the region's largest trading hub, saw decreasing HSFO cargoes shipped from the Middle East these days.