Gasoline: Gasoline: Chinese oil firms increase sales for Nov-loading cargoes

The differential for MR-size cargos of 92RON gasoline on an FOB Northeast Asia basis went sharply down on week. Higher freight rates pushed down the market. Transportations of oil products were increasing and freight rates stayed firm. In addition, cargoes from the Middle East were flowing into Asia, and supply looked ample in Singapore. In the Middle East, the 400,000b/d Jizan refinery was scheduled to be shut down for turnaround in December, but seemed to be postponed to March.

On the other hand, the Chinese government would lower the rebate of value added tax from December, so that refiners in the country were increasing exports in November.

Naphtha: Markets stable but crackers' operation rates stay low

The first half January open-spec naphtha prices on a CFR Japan basis were unchanged. A market participant said that it was one of the points whether loose supply/demand fundamentals that had continued since the second half December-delivery would be eased or not. However, there was no sign that the operation rates of naphtha crackers would rise in some countries like South Korea.

Some new naphtha crackers were scheduled to start operations in China next year and demand for the material was expected to increase from the country. On the other hand, petrochemical companies in other countries might probably reduce the operation rates or were shut down, so that total demand in Asia was pointed out not to increase much. An independent firm Shandong Yulong Petrochemical in the country had started a test run of its naphtha cracker by late November. On the other hand, according to a market participant, Yulong was unlikely to start commercial runs due to poor production margins of petrochemicals.

One South Korean petrochemical company bought naphtha for delivery in the first half January at a discount of around $1.00/mt to Japan quotations to be assessed 30 days before on a CFR basis.

Middle distillates: 10ppm GO up but 500ppm GO down

The differential for MR-size cargoes of jet fuel on an FOB Northeast Asia basis were unchanged. One Japanese refiner was shutting down some desulfurization facilities at one of its refineries and refining volumes of kerosene were decreasing. Due to the issue, the refiner had bought at least three MR-size cargoes of kerosene spec loading in South Korea and China. South Korean oil firms were prioritizing to supply cargoes with term contracts. In addition, they domestically needed to adjust increasing demand for kerosene. Thus, they were inactive to sell jet fuel in the spot market.

The differential for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis strengthened. Supply/demand fundamentals were expected to tighten going forward as demand was likely to pick up. Demand of gasoil seemed to be increasing in Europe as heating oil, and purchases of cargoes were expected to the region. In addition, demand in Australia and New Zealand were also said to be increasing toward the summer demand season. On the other hand, exports from China and South Korea remained few, and a sense of tight supply lingered in Northeast Asia. One Taiwanese oil company almost struck an annual term contract in 2025. The volume was 300,000-400,000bbl-per-month and prices were at a premium of around 40cts/bbl.

The differential for MR-size cargoes of 0.05% sulfur gasoil on an FOB Northeast Asia basis softened. A sense of tight fundamentals retreated. Buying interest for December-loading cargoes was decreasing from Indonesia state-owned Pertamina compared to November-loading cargoes.

Fuel oil: HSFO supply still seems tight

The differential for MR-size cargoes of 3.5% sulfur fuel oil (380cst) on an FOB Japan basis was remaining in the same level. The market underlying tone continued to be solid due to supply tightness. Oil companies shipped less cargoes, whereas buyers kept seeking for a certain number of cargoes. A few independent oil companies in China and traders were hunting for cargoes of high sulfur fuel oil (HSFO) in the Northeast Asia area, a market participant said. They apparently aimed to use HSFO at refineries as a base material or to resell to the bunker fuel market.

The price for VLSFO in Tokyo Bay was at $561.50/mt as of Nov 27, down $15.00/mt on week with a fall in the 0.5% sulfur fuel oil paper swaps values in Singapore. Some Japanese trading houses could not consume monthly sales quotations in November because they lost demand competitions with South Korea and China. Demand for December-delivery usually tends to decrease, so that a part of market participants actively promoted sales. The market prices in Japan tended to be significantly lower than in South Korea and China.