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Products: Mar 4-8:Tightness in spot supply continues on the back of turnaround for refineries

2019/03/11 07:00


The differential for MR-size cargoes of 92RON gasoline on an FOB South Korea basis was up in line with strong market in Singapore. Also, the bullish factor was declining freight rates. However, most refiners in Northeast Asia seemed not to have fixed export schedules in April. In the meantime, demand in Vietnam was possibly going to retreat. There were views that regular maintenance of the 200,000b/d Nigh Son refinery in the country was said to be postponed in the quarter to December which was initially planned in the quarter to June.



In Northeast Asia, LG Chem and Hanwha Total in South Korea entered into turnaround for naphtha crackers. Demand for naphtha would be expected to decrease. Meanwhile, Formosa Petrochemical Corporation (FPCC) shut down its Crude Distillate Unit (CDU) of the 540,000 Mailio refinery due to regular maintenance until Apr 13. Further, still some refineries in Asia were in turnaround, and tightness in supply continued. The supply volume of arbitrage cargoes from Europe to Asia would be estimated to be lower than 1,500,000mt, and it would be a bullish factor for naphtha market situations.



The differential for MR-size cargoes of 0.05% sulfur gasoil on an FOB South Korea basis moved up with tight supply/demand fundamentals. On the back of regular maintenance of refineries, the number of spot cargoes 0.05% sulfur gasoil loading in April from Northeast Asia seemed to be limited. In addition to 0.05% sulfur gasoil, supply of 0.001% sulfur gasoil was also expected to be tight. On the other hand, as reported, demand for vessels off the coast of Taiwan were recovering. On Thursday, a refiner in South Korea was making moves to sell a 0.05% sulfur gasoil loading in April from Yeosu. The differential on an FOB Taiwan basis went up with a rise in that on an FOB South Korea basis.



The differential for MR-size cargoes of 0.3% sulfur fuel oil on a CFR Japan basis was as the winter demand season was winding down. Korea East West Power Co (EWP) bought 30,000mt of 0.3% sulfur fuel oil to be delivered on Mar 17-21 at a premium of $67.35/mt to Singapore quotations on a CFR basis. The seller was GS Global. Offers from other participants in the tender were heard in the $70's to $80's/mt to the same quotations. On the supply side, some refiners including Formosa Petrochemicals Co (FPCC) in Taiwan shut down their refineries for regular maintenance, so that supply of fuel oil was expected to decline. A market source said that even though demand would decline, prices for fuel oil in Asia were possibly going to stay firm on tight supply.


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Tokyo : Products Team  Yasuaki Yokoi  +81-3-3552-2411
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