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Weekly Summary

Products: Mar 23-27: Naphtha crack margins sharply worsen

GASOLINE

The differential for MR-size cargoes of 92RON gasoline on an FOB China basis shed on sluggish demand. Due to the outbreak of the COVID-19, demand for gasoline was retreating not only in Asia, but also in Europe and the US. On the back of the recently weak market, in the paper swaps market in Singapore, the Apr/May spread was in contango of $1.50/bbl. On Wednesday, a refiner in China reportedly sold an MR-size cargo of 92RON gasoline loading on Apr 29-30 from South China at a discount of $1.35/bbl to Singapore quotations on an FOB basis.

 

NAPHTHA

In Asia, as reported, naphtha crack margins were sharply worsening, and refineries would possibly reduce naphtha supply. On the other hand, an Asian trader viewed that naphtha prices were low enough to attract buyers' movements to procure naphtha. Due to the recent price falls in naphtha, ethylene crack margins to naphtha was improving. However, an Asian oil company mentioned that demand for petrochemical products remained weak, adding that demand for naphtha was declining further while supply for naphtha was shrinking due to the production cuts at refineries. Another Asian market participant perceived that prices for open-spec grade to be delivered in the first half May already seemed to have dipped to a discount level on a CFR Japan basis. Due to the falling market, the intermonth spread turned into contango.

 

MIDDLE DISTILLATES

The differentials for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis dentedon sluggish demand. Amid the outbreak of the COVID-19 ongoing, there were almost no movements to procure 0.001% sulfur gasoil cargoes seen in the market. Sellers had to lower offers now. A market source said that a seller in South Korea sold an MR-size cargo of 0.001% sulfur gasoil loading at the end of April at a discount of $1.50/bbl to Singapore quotations on an FOB basis. Meanwhile, spot availability of Northeast Asian refiners was not so many in part due to the production cuts at their refineries. A refiner in Japan was said to export only around five cargoes in April. The company usually exports more than 10cargoes in a usual month. A trader pointed out weak demand was pushed down the market although the number of export cargoes was declining.

 

FUEL OIL

The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis plunged. In Asia, refiners kept production cut at their refineries due to declining demand. However, they were said to increase production of 0.5% sulfur fuel oil due to its relatively high profitability. Therefore, supply of 0.5% sulfur fuel oil from South Korea was not so tight. In South Korea, Hyundai Oilbank was planning to shut down some units at its refinery in April, while GS Caltex had been cutting crude runs at its refinery and SK Energy had lowered crude run rates by 15% at its refinery. In the meantime, a bid for 0.5% sulfur fuel oil on an FOB China basis was heard at a discount of $80.00/mt to Singapore quotations (0.001% sulfur gasoil). However, the cargo had not been traded as the bid was a little too low comparing to the level the seller expected.

 

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Tokyo : Products Team  Yasuaki Yokoi   +81-3-3552-2411Copyright © RIM Intelligence Co. ALL RIGHTS RESERVED.