GASOLINE

The differential for MR-size cargoes of 92RON gasoline on an FOB Northeast Asia basis dented. Amid the outbreak of the COVID-19 across the globe, demand for gasoline was declining not only in Asia, but also in Europe and the US. This week, a refiner in China sold two MR-size cargoes of 92RON gasoline loading on Apr 19-20 from South China at a discount of $1.00/bbl and at a discount of $1.30/bbl to Singapore quotations (92RON) on an FOB basis. A refiner in South Korea was making moves to sell cargoes loading in April, but deals had yet to be heard. With only few buyers seen in the market, the seller seemed to be considering stopping the sale of some cargoes.

NAPHTHA

In the Northeast Asia spot market, spot procurement for first-half May delivery emerged. LG Chem in South Korea was informed to have purchased naphtha for first-half May delivery at a premium of $4.50/mt to Japan quotations tied with a 45-day pricing formula. Formosa Petrochemical Co (FPCC) in Taiwan bought 100,000mt open-spec grade at a premium of $3/mt to Japan quotations pegged to a 45-day pricing formula. Although the grade was not clear, Korea Petrochemical Ind Co Ltd (KPIC) also purchased naphtha at a premium of $3/mt to Japan quotations pegged to a 45-day pricing formula. Further, Asahi Kasei procured at a premium of $5/mt to the same quotations tied with a second-half March pricing formula. Meanwhile, total volumes from the outside of regions to Asia for March were expected to be 5.9-6.0 mil mt, increasing from 5.1 mil mt in February.

MIDDLE DISTILLATES

The differentials for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis plunged. Amid the sluggish demand, freight rates were also increasing. Demand in Australia, one of the main outlets for cargoes from Asia, seemed to be declining due to the outbreak of the COVID-19. The arbitrage window for cargoes to flow into regions outside of Asia was hard to open because of the high freight rates. Only some demand was seen for building up inventories in the contango market situation. It was reported that an MR-size cargo loading in April from South Korea was traded at a discount of $1.20/bbl to Singapore quotations on an FOB basis.

FUEL OIL

The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis fell on slashes in demand. Remarkably extended losses in stock prices and crude prices recently enhanced concerns of economic recessions. 0.5% sulfur fuel oil on an FOB Korea basis loading in April was traded at a discount of $70-75/mt to Singapore quotations (0.001% sulfur gasoil). In Thailand, PTT Global Chemical (PTTGC) closed its latest tender on Monday to sell 35,000mt 0.5% sulfur fuel oil loading in mid-April but the result was not unknown at present. In the meantime, China state-run Sinopec, PetroChina, and China National Offshore Oil Corporation (CNOOC) were expected to export more 0.5% sulfur fuel oil along with a tax refund policy. Slackening supply and demand fundamentals would likely weigh markets for 0.5% sulfur fuel oil in South Korea, also.

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