GASOLINE

The differentials for MR-size cargoes of 92RON and 93RON gasoline on an FOB North Asia basis weakened on expectations that supply would increase. In China, the government was possibly going to grant the second export quota of oil products this year in the near term, and oil companies would actively export cargoes loading in September. As reported, due to the heavy flood in China, demand of gasoline in the country was declining, so that inventories were piling up. Therefore, traders were lowered their buying ideas. On Wednesday, Formosa Petrochemicals Co (FPCC) in Taiwan sold two 250,000bbl cargoes of 93RON gasoline loading in late September at a premium of lower than $1.00/bbl to Singapore quotations on an FOB basis.

NAPHTHA

A Northeast Asia end-user noted that the price gap of two different grades between open-spec naphtha and light naphtha was narrowing as prices for light grade were slightly softening. Naphtha prices stayed high at around $700/mt, and ethylene crack margins against naphtha were at around $300/mt. It was perceived that ethylene prices going forward would be lower, so that downward pressures on light naphtha as feedstock of ethylene were strengthening gradually. Further, the end-user viewed that the intermonth spread was in backwardation as the recent prices were seen at the peak, and naphtha prices for second-half September delivery as blending stock for gasoline would weaken along with the end of the driving season in the US in first-half September. In the meantime, Maruzen Petrochemical in Japan was going to issue a buy tender for open-spec naphtha or paraffinic naphtha with paraffine content at 80% arriving in mid-September this week.

MIDDLE DISTILLATES

The differentials for MR-size cargoes of 0.001% sulfur gasoil on an FOB were unchanged. Most market players had almost finished their spot sales for cargos loading in August, and were shifting to those for September loadings. Meanwhile, market sources who were keen on cargoes loading in September pointed out that prices for cargoes from Northeast Asia in September could be weak in part due to large volumes were possibly going to be exported from China in September onwards. In Japan, operation rates of refineries had risen to 95.1% as some refineries which had been shut down for glitches or turnaround were now restarting their operations. Therefore, some refiners in the country including ENEOS were said to increase exports, who had been net buyers for July and August cargoes.

FUEL OIL

The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis declined on the impact of a fall in the differential of VLSFO for bunker fuel. Recently, a cargo of 0.5% sulfur fuel oil loading in August had been exported to Singapore at a discount of $25.00-30.00/mt to Singapore quotations (0.5%S). Besides the cargo, exports of fuel oil cargos from South Korean refiners had not been confirmed this year. In the meantime, SK Energy was planning to increase the supply volume of VLSFO for August to 350,000-400,000mt per month compared to the previous monthly volume at around 200,000mt. On the mirror of these situations, a South Korean oil company reported that the differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis was down to a discount in the range of $20.00-30.00/mt to Singapore quotations (0.5%S).