GASOLINE

The differential for MR-size cargoes for 92RON gasoline on an FOB Northeast Asia basis was left unrevised. It was too early to start talks over September loading and the market was quiet. Since most Northeast Asian refineries did not make export plans for September loading as yet, full-fledged spot trade would likely start next week onward. Formosa Petrochemicals Corp (FPCC) in Taiwan planned spot sales of September loading and intended to begin selling next week. Chinese refineries also continued exporting gasoline. Dalian West Pacific Petrochemical Co Ltd (WEPEC) had been suspending operations due to troubles since early June and would restart it in end-August. Thus, this company might resume exports for September loading or later. Meanwhile, in Indonesia, one-month planned maintenance began at the 260,000bbl/d Balikpapan refinery on Monday and the country might carry out imports. State-owned Pertamina conducted a buy tender for 100,000bbl of 92RON gasoline for delivery to Balikpapan on Oct 8-25.

NAPHTHA

In the Northeast Asian spot market, South Korean players were actively procuring September delivery cargoes. LG Chem and Lotte Chemical were said to have purchased a second-half September delivery and a first-half September delivery naphtha with a paraffin content of 70%, respectively, at a small premium to Japan quotations. Northeast Asian traders said that the spot differential for open-spec naphtha for second-half September delivery on a CFR Japan basis was at a small premium to Japan quotations on a 30-day before arrival basis. Meanwhile, GS Caltex apparently secured a heavy full range naphtha for first-half September delivery at a premium of $12/mt to Japan quotations. With the gasoline market softening with a surge in stockpiles of gasoline in the US, the market for heavy full range naphtha, a base material of gasoline, was also gradually dropping.

MIDDLE DISTILLATES

The differential for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis went up. The backwardation market structure in the paper swaps market pushed up the differentials for cargoes loading in early September. In the Singapore paper swaps market, the timing spread between Sep/Oct contracts was in backwardation of around $2.00/bbl, so that buyers were willing to procure cargoes loading in the first half of September to avoid the risk of the large timing spread. In the meantime, refiners in Taiwan were talking on spot cargoes loading in September. 750,000bbl each of 0.001% sulfur gasoil for loading on Aug 30-Sep 3 and 0.05% sulfur gasoil for loading on Sep 9-13 through a tender. These Aug 30-Sep 3 and Sep 9-13 loading cargoes were awarded on an FOB basis at a premium of around 45cts/bbl to the quotations and a discount of $9.00-9.50/bbl to the quotations, respectively. FPCC planned to sell additional 0.001% sulfur gasoil for September loading. Based on the deal, an MR-size cargo loading in early September from Taiwan could be traded at a discount of around 50cts/bbl to the quotations on an FOB basis. CPC Co also issued a tender to sell 300,000-450,000bbl loading on Sep 1-22.

FUEL OIL

The differential for MR-size cargoes of 0.3% sulfur fuel oil on an FOB South Korea basis lost along with a rise in supply of low sulfur fuel oil. Northeast Asian refineries indicated that supply of low sulfur fuel oil from refineries in Northeast Asia was on the rise. The spread with the difference in sulfur content shrank to about $25.00/mt per 0.1%. Prices for 0.3% sulfur fuel oil were said to be around $50.00/mt above those for 0.5% sulfur fuel oil. In addition, freight costs between South Korea and Japan were keeping high. The differential for MR-size cargoes of 0.3% sulfur fuel oil on an FOB South Korea basis reportedly fell. Meanwhile, in Taiwan, CPC Corp, which met demand for 0.3% sulfur fuel oil with term cargoes, did not plan to carry out buy tenders in August.