Gasoline: Bullish factors push up market

The differential for MR-size cargos of 92RON gasoline on an FOB Northeast Asia was unchanged on week. However, some bullish factors were seen in the market and market sentiment looked strong. In the Singapore paper swaps market, the timing spread between May/Jun contract was in backwardation of around $1.35/bbl and traders were willing to buy cargoes loading in early May to avoid the risk. In addition, purchases for cargoes for Mexico were expected to increase as the arbitrage window from Asia to the US West Coast remained open. Last week, several cargoes from China loading in April were traded for Mexico. In Southeast Asia, Petrolimex in Vietnam was moving to buy 11,000mt each of 92RON and 95RON gasoline loading in early May. In Northeast Asia, GS Caltex in South Korea had already decided its export plans in May and was expected to move on sales of them in the near term. The company seemed to have spot availability in the month as it had finished planned maintenance activities of its refinery. 　　

Naphtha: Recovering ME supply capacity leads strong selling interest

Open-spec naphtha prices on a CFR Japan basis were at a premium of $6.00-7.00/mt to Japan quotations to be assessed 30 days before delivery. Although demand didn't increase, supply capacity was recovering, so that the market prices tended to decline.

One South Korea petrochemical company bought naphtha with a minimum paraffine content of 70% for delivery in the second half May delivery at a premium of $3.00/mt to the quotations to be assessed 30 days before delivery on a CFR basis via a tender. One Japan petrochemical company procured 25,000mt of open-spec for delivery in the second half May at a premium below $5.00/mt to the quotations on a CFR basis via a tender.

Maintenance activities of refineries finished in some countries in the Middle East. A market participant showed a view that supply capacity fully recovered in Qatar. It was said to be a main reason to push the market down. On the other hand, the average operation rates of naphtha crackers in Japan and South Korea were heard to be at around 80% at present because it remained hard to secure production margins of olefines. No sigh to increase demand surfaced. One naphtha cracker in Japan shut down operations this week for repair works. According to a source, maintenance activities were scheduled for two weeks. At present, total three naphtha crackers had maintenance.

Middle distillates: Fundamentals for jet fuel tight

The differential for MR-size cargoes of jet fuel on an FOB Northeast Asia strengthened. A sense of tight supply/demand fundamentals led both prices up. Formosa Petrochemical Corp (FPCC) in Taiwan sold a 300,000bbl cargo loading on May 16-20 at a discount of 45cts/bbl to the quotations on an FOB basis via a tender closed on Tuesday. It was heard that about 10 bids were posted, showing strong buying interest. As reported, sales volume from South Korea and China was at present few and Japanese refiners seemed to buy May cargoes. In addition, the arbitrage from Asia to Europe widened.

The US-based energy supplier World Fuel Services (WFS) announced that it would additionally supply sustainable aviation fuel (SAF) to the United Kingdom Ministry of Defence (UK MOD) from July to September this year. The total volume is 5.15 mil liters.

The differential for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia was unchanged. Sales of May loading cargoes from South Korea were expected to start soon. According to several market sources, GS Caltex and SK Energy were planning to sell some cargoes. No fresh sales from China were seen to date. Market players expected the Chinese government to notify the second export quotas of oil products at the end of April. However, this information was still uncertain and many market participants remained in a wait-and-see stance.

Buying interest emerged from Vietnam's Petrolimex. It was pointed that the buying was due to major maintenance activities of PetroVietnam's Dung Quat refinery. 　

Fuel oil: China has little room for Korea's cargoes

The differential for MR-size cargoes of 3.5% sulfur fuel oil (380cst) on an FOB South Korea basis was remaining in the same level. No new talks were detected for FOB South Korea cargoes. One South Korean oil company ran down its refinery for regular maintenance, reducing its high sulfur fuel oil (HSFO) production. On the other hand, China, a big consumer state, apparently suffered a loss of appetite for South Korea's cargoes as local state-owned and independent oil firms were expanding their oil refining volumes. "Nobody knows when concerns of oversupply would be resolved," said a market player in South Korea.

Market News

S-Oil in South Korea acquired ISCC CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) certification on Apr 4 and became the first producer of SAF (Sustainable aviation fuel) in the country. According to market participants, the refiner planned to start producing bio-based products in May to June and to sell small lots in June or July and MR-size cargoes at around the end of 2024.