Gasoline: Arb to US about to open and purchases for Mexico surface

The differential for MR-size cargos of 92RON gasoline on an FOB Northeast Aisa basis was unchanged on week. Talks on cargoes loading in August were not heard and the spot market remained at a standstill. Refiners in Northeast Asia seemed to be fixing their export schedules in August, and no sales were confirmed. Formosa Petrochemicals Co (FPCC) in Taiwan had sales availability in August, but was not moving to sell any volumes as the company had yet to fix their laycan. In China, PetroChina, one of the main sellers of gasoline in the country, had just finished its sales for cargoes loading in July and it was a little too early to start talks on August ones.

On the demand side, the arbitrage window from Asia to the US West Coast was about to open and movements to buy cargoes for Mexico were witnessed. State-owned Pemex was reported to have an MR-size cargo each of 92RON and 95RON gasoline loading in late July in the Singapore market.

Naphtha: Rising gasoline markets support naphtha prices

Open-spec naphtha prices on a CFR Japan basis remained at a premium of mid-teens/mt to Japan quotations to be assessed 30 days before delivery. Gasoline market prices recently tended to rise and it supported the naphtha market prices, it was pointed out. According to sources, the gasoline market prices were rising because the demand season was starting but some refineries' troubles happened.

On the other hand, curtailed operation rates of naphtha crackers weighed on the naphtha prices. One Taiwanese company planned to shut down one of its naphtha crackers in August. One South Korean petrochemical company would probably cut the operation rates going forward.

Middle distillates: Selling interest of gasoil strong from Korea

The differential for MR-size cargoes of jet fuel on an FOB Northeast Asia basis was stable. According to sources, there was a sign that the arbitrage window for Europe would open. In the region, refining volumes of the fuel seemed to decline due to troubles and workers' strike. On the other hand, the arbitrage for the US remained closed. In the country, the operation rates of refineries were maintained at the high level. In addition, freight rates of MR-size vessels were also hovering at the high level.

U.S.-based sustainable aviation fuel producer LanzaJet announced that MUFG Bank in Japan would invest in the company. LanzaJet is planning to use the funds to expand its production capacity that producers SAF from ethanol.

The differential for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis went down on slack supply/demand fundamentals. Selling interest for July-loading emerged from South Korea. SK Energy issued sell tenders for MR-size cargoes of 0.001% sulfur gasoil loading on Jul 19-21 and Jul 25-27. The tender closed on Thursday. The South Korean government reduced the tax cut rates on oil products from 37% to 30% from Jul 1. Demand for gasoil had been slack in South Korea for a long time, and it was expected that sales would become slower. Some market participants pointed out that the strong selling interest from South Korea was increasing and a sense of surplus in the Asia region could strengthen. Inventories were also building up in China due to lackluster domestic demand. It was informed that oil companies were trying to sell MR-size cargoes as July-loading.

The arbitrage window from Asia to Europe was closed. European markets weakened due to poor demand. While Middle Eastern and Indian products were supplied to Europe until June, there were indications that sales volumes to Asia might increase from July onward.

Fuel oil: Sentiment gets bearish on ample non-Asia's cargoes

The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis was unchanged. A South Korean player seemed to mull shipping spot cargoes of low sulfur fuel oil (LSFO) for loading in July or August, according to a market participant familiar with the matter. Meanwhile, oil firms and traders in neighbor countries such as China, Japan and so on had no appetite for LSFO. Despite of troubles happening often at refineries in Japan, "Japan appears not to face a severe supply-demand crunch enough to rush to the international market to secure LSFO," said a source at a South Korean oil company.

Five or six LR-size cargoes shipped from Nigeria's 650,000 barrel-per-day Dangote refinery were likely to arrive at Singapore in July. An industry source expected the supply and demand balance to loosen in Asia due to the LR-size cargoes.