Gasoline: China exports forecast to decline

The differential for MR-size cargos of 92RON gasoline on an FOB Northeast Asia basis was unchanged. With refining margins staying poor, refiners in Northeast Asia were inactive to sell cargoes loading in July. Talks in the spot market lacked momentum with only few bids and offers. Meanwhile, it was forecast that exports from China in July would decline. With gasoline refining margins shrinking, refines in the country were inactive to export the fuel due to low inventories on the back of low operation rates of refineries. PetroChina sold an MR-size cargo of 92RON gasoline for delivery in Singapore in late July from the Daqing refinery. In Southeast Asia such as Indonesia, the largest importer of the fuel in the region, spot purchases had been scarce. Market players in the Philippines also seemed to be poor as domestic shipment was delayed.

Naphtha: Market sentiment steady as EU supply expected to decline

Open-spec naphtha prices on a CFR Japan basis were steady. It was pointed out that cargoes for delivery from Europe to Asia in August were decreasing and it made supply tight. In Europe, demand for naphtha for delivery in July was heard to be increasing. Thus, there were not enough cargoes for to Asia, some market participants mentioned. According to a source, a part of petrochemical companies in Europe seemed to move on decreasing the inventory level of the fuel as of the end June.

However, the price spread between naphtha and LPG tended to widen due to recent rising naphtha prices. An expectation surfaced that demand for LPG would increase again instead of naphtha. One Japanese petrochemical company was considering to buy butane for delivery in September or October.

Middle distillates: Market slightly lower on poor buying interest from US

The differential for MR-size cargoes of jet fuel on an FOB Northeast Asia basis went down. In the U.S, one of the main buyers of Asian loading products, the summer demand season is underway, but inventories remained high. The arbitrage window from Asia to the U.S. West Coast was not stable in part due to strong freight rates. In China, Rongsheng Petroleum sold an MR-size cargo loading on Jul 22-24 through a tender. It was with the high flash point and low sulfur content, but due to limited inquiries from the U.S., the price gap between the cargo and a usual spec one appears to be shrinking.

Exports of sustainable aviation fuel (SAF) from South Korea are proceeding. Hyundai Oilbank has exported SAF that was produced from vegetable oil to Japan through a trading house Marubeni Co by June. The volume was brought into an oil terminal in Chiba owned by Marubeni Ennex and was supplied to ANA. S-Oil Co also started productions of SAF from this April. However, its exports seem to be still limited due to a lack of its carbon credit. Both Hyundai and S-Oil introduce the Co-processing method for SAF productions to their refineries. By throwing oil-derived raw materials, vegetable oil and used cooking oil into the unit all together, bio-derived oil products are refined. Oil companies are able to avoid large scale repair works of refineries and to curtail big amounts of investments in general.

The differential for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia weakened. High freight rates and retreating buying interest seemed to weigh on the market. In the spot market, the tradable prices on an FOB basis tended to be capped due to high freight rates. In the meantime, buyers had almost secured cargoes they needed. On the supply side, oil companies in China, one of the main exporting countries, were expected to start full-fledged sales for cargoes loading in July soon.

Fuel oil: Nigeria's refinery small fire has little impact on FO market

The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis was unchanged. A small fire broke out at the 650,000 barrel-per-day Dangote refinery in Nigeria, according to an industry source. The fire was already extinguished, purportedly having no effect on Dangote's refining equipment. The refinery seemed to be also producing fuel oil normally and showed no delay in shipment to Europe, Asia and other areas. At a specific point on Jun 26, many players believed that the refinery might have problems with shipping, which in turn lead to a temporary price hike of fuel oil. As of Jun 27, however, the market regained calmness.NE Asia LSFO loses ground on prospect of higher supply.