Products: Jul 5-9:MR Gasoline gains on thin supply
The differential for MR-size cargoes of 92RON gasoline on an FOB Northeast Asia basis went up. As reported, exports from China were sharply declining. Refiners in the country were unable to make moves to export cargoes due to a lack of export quota of oil products. In addition, it was reported that cargoes from the Middle East and India flowing into Asia were decreasing due to some troubles at secondary units at some refineries. Meanwhile, in Japan, some trading houses were said to be actively looking for cargoes in South Korea.
In the Northeast Asian petrochemical markets, olefin prices were recovering. Ethylene crack margins against naphtha were improving to around $300/mt, and petrochemical makers were running fully its naphtha crackers. In the meantime, as reported, a new naphtha cracker owned by GS Caltex in South Korea was confirmed the production of on-spec grade on Jul 6. Owing to increases in supply of olefins along with rising up the runs, the prices were still highly estimated to be weaker again. In case of that, demand of paraffinic naphtha as the stuff for olefins would likely shrink. Already, buying interest for the grade loading from the US was withdrawing, and extending demand in the US was narrowing the arbitrage to Asia.
The differentials for MR-size cargoes of jet fuel on an FOB North Asia basis went up on increasing demand. Although demand in Asia remained sluggish, the arbitrage window for cargoes to flow into North America was temporally open, so that some traders were actively making moves to procure cargoes for the region. Meanwhile, on Monday, GS Caltex in South Korea sold two MR-size cargoes loading on Aug 1-5 and Aug 6-10 through a tender at a discount of 20cts/bbl and at a slight premium to the quotations on an FOB basis. On the same day, Formosa Petrochemicals Co (FPCC) in Taiwan also sold 300,000bbl loading in mid-August at a premium of slightly higher than 5cts/bbl to the quotations on an FOB basis.
The differential for MR-size cargoes of 0.3% sulfur fuel oil on an FOB South Korea basis was unchanged. In Japan, movements for switching use from liquefied natural gas (LNG) to 0.3% sulfur fuel oil as the fuel of power generation were emerging in reaction to surging LNG prices at present. Recently, Chugoku Electric Power seemed to have procured 10,000mt 0.3% sulfur fuel oil. Also, Tohoku Electric Power seemed to be considering for purchasing 10,000-20,000mt via any Japanese trading firm. In Taiwan, CPC closed a tender to buy 40,000mt 0.3% sulfur fuel oil arriving in August on Wednesday. The validity was set on Friday. Further, Formosa Petrochemical Co (FPCC) sold 10,000mt 0.5% sulfur pyrolysis fuel oil loading in mid-July to Shell through a tender.