GASOLINE

The differential for MR-size cargoes of 91RON gasoline on an FOB South Korea basis went up on firm demand in Australia. Last Tuesday, GS Caltex in South Korea sold an MR-size cargo of 91RON gasoline loading on Oct 22-24 via a tender at a premium of $3.40/bbl to the quotations. The cargo was to be brought into Australia.

NAPHTHA

In the Asian spot market, deal prices for cargoes for delivery in the first half of November were increasing. Last Wednesday, Mitsui Chemical in Japan reportedly bought naphtha to be delivered in Osaka from the end of October to early November through a tender at a premium in the range of $4.00-5.00/mt to Japan quotations. Meanwhile, in the heavy full range naphtha market, pure heavy full range grade to be delivered in Asia was said to have been done at a premium of over $60/mt to the quotations. In Japan, Fuji Oil and Taiyo Oil were reportedly procuring heavy grade naphtha. In the country, as the stimulus package to promote travels was undergoing, and demand for gasoline, heavy naphtha is used as one of the raw materials, stayed firm. In the talks of term cargoes, Maruzen Petrochemical had reportedly struck a term deal to buy cargoes in the quarter to March. Its grade was open-spec naphtha, and the price was at a discount of $1.00/mt to the quotations. However, Keiyo Ethylene, which Maruzen also invests in, was expected to refrain from buying any cargoes for delivery in the first half of November. As of now, demand for petrochemical products in China remained sluggish due to lockdown to prevent from the COVID-19 outbreak, which was expected to continue until mid-October. Thus, demand for naphtha, a raw material of petrochemical products, was poor. However, the market was expected to recover in mid-October onwards as the lockdown was forecast to be eased. China National Offshore Oil Co (CNOOC) reportedly stuck a term deal to buy cargoes on a CFR basis.

MIDDLE DISTILLATES

The differentials for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis were unchanged. However, downward pressures were strengthening on the differentials for cargoes loading in late October. Buying interest of traders was retreating amid the backwardation market structure. Meanwhile, the Chinese government was expected to announce the export quotas of oil products in the near future, and it was concerned that more cargoes would be supplied from China. In the talks of spot cargoes, China National Offshore Oil Co issued a tender to sell an MR-size cargo loading on Oct 13-14 on last Thursday with its price validity date set on last Friday. In Japan, Idemitsu Kosan had some cargoes for sale loading in October, but no deals were reported to date. ENEOS earlier moved on sales for cargoes loading in the month, but was said to have stopped them as the company would focus on sales in the domestic market.

FUEL OIL

The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis was unrevised. In Northeast Asia, incoming typhoon Nanmadol was possibly going to affect port operations. In South Korea, although the typhoon was unlikely to make landfall, port operations could be suspended on last Friday and last Saturday. However, no impacts were expected on the refineries in the country. It was possible that port closures could become a bullish factor for the market as supply was temporally halted on the back of delay of vessels, but it would not push up the differential for cargoes from South Korea. Rather, refiners in the country were expected to keep the high operation rates of their refineries until late September when the turnaround season would start, and ample supply made prices for low sulfur fuel oil low. On the other hand, SK Energy, the largest supplier of the fuel in South Korea, was scheduled to shut down some units including two crude distillation units at its refinery from October to early November for regular maintenance, so that prices going forward were expected to recover.