GASOLINE

The differential for MR-size cargoes of 92RON gasoline on an FOB China basis strengthened on expectations that supply would decline. As exports from China were likely to stay few, a sense of tight supply emerged in Northeast Asia. The first export quotas of oil products given by the government were almost as half as those in the previous year. Early in the previous week, West Pacific Petroleum Co Dalian (WEPEC) sold an MR-size cargo of 93RON gasoline loading on Jan 17-19 at a premium of slightly higher than 20cts/bbl to Singapore quotations on an FOB basis. For talks on spot cargoes loading in February, Formosa Petrochemicals Co (FPCC) in Taiwan sold 250,000bbl of 93RON gasoline loading on Feb 14-18 through a tender at a premium of $1.30/bbl to the quotations on an FOB basis.

NAPHTHA

In the Northeast Asia spot market, South Korean end-users were seen to have procured cargoes for February delivery. However, a source in Asia saw that the differentials for naphtha on a CFR Japan basis were softening. As a bearish factor, demand of naphtha as feedstock of ethylene was retreating. Ethylene crack margin over naphtha was lower than $300/mt. LG Chem was pulling down its operation rates of its naphtha cracker to around 80%. Other petrochemical makers would likely cut the run rates as well.

MIDDLE DISTILLATES

The differentials for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis strengthened. The first export quotas of oil products granted by the Chinese government were almost as half as those in the previous year, so that exports from the country were expected to decline. On Jan 6, Formosa Petrochemicals Co (FPCC) in Taiwan sold an MR-size cargo loading on Feb 20-24 through a tender at a premium of around 25cts/bbl to the quotations on an FOB basis. On Jan 5, CPC Co sold an LR-size cargo and an MR-size cargo loading in early and mid-February at a premium of 50cts/bbl and at a premium of 30cts/bbl to the quotations, respectively.

In Japan, some refiners were planning to sell spot cargoes loading in February, but any deals had yet to be reported. One of them seemed to have sold a cargo loading at the end of January at a discount of 80cts/bbl to the quotations on an FOB basis. Due to its prompt laycan, the price was likely to have been lower than the market level.

FUEL OIL

The differential for SR-size cargoes of 0.3% sulfur fuel oil on an FOB South Korea basis was unchanged. However, an Asian oil company viewed that prices for February arrivals were lower than those for January arrivals. As a bearish factor, it was cited that low sulfur fuel oil prices in Singapore, the hub market in Asia, were receding. In South Korea, SK Energy had sold a cargo of 45,000mt 0.5% sulfur fuel oil at the end of December. The price was unsure. In China, the government granted export quotas of oil products for the first time of this year. The volume for low sulfur fuel oil increased to 6.5 million (mil) mt in total compared to 5.0 mil mt for the previous year.