Gasoline: Prices for all specs up with lower freights and decreasing supply

The differentials for MR-size cargoes of gasoline of all specs on an FOB Northeast Asia basis strengthened on week. Buying interest arose as the market had been undervalued. In the meanwhile, declining freights rates pushed up prices on an FOB basis. The freights of MR-size vessels between South Korea and Singapore slipped to around $2.00/bbl.

Supply from Northeast Asia also seemed few. In Japan, troubles had reportedly taken place at some ENEOS's refineries and its exports were expected to decline. In China, in addition to some regular maintenance activities of refineries, refiners were reluctant to export as they were focusing on domestic supply. A total export volume was likely to reach around 600,000mt in March. In South Korea, several refiners such as GS Caltex was planning to have turnaround of their refineries, and their export availability was lowering.

GS Caltex in South Korea sold one MR-size cargo of 91RON gasoline loading on Mar 16-20 at a premium of around 75cts/bbl to the quotations on an FOB basis via a tender. This cargo seemed to be transported to Australia.

Naphtha: Two naphtha crackers shut due to power outage in Daesan, Korea

The first half April open-spec naphtha prices on a CFR Japan basis advanced on week due to tighter supply/demand fundamentals. Procurements for new naphtha crackers in China were increasing. On the supply side, the arbitrage cargoes from Europe to Asia were pointed out to decrease. Those factors would make fundamentals tight. In talks on cargoes for delivery in the second half Apil, demand as a gasoline raw material was expected to expand.

One Japanese petrochemical company bought two open-spec naphtha for delivery in the first half April via a tender closed on Wednesday. The awarded price for one 25,000mt cargo for delivery on Apr 1-15 was at a premium of around $15.00/mt to the first half March Japan quotations on a CFR basis. Another one was traded at a premium over $20/mt to the same quotations on a CFR basis due to some special conditions for delivery dates and specs.

The differentials for LR-size cargoes on an FOB Middle East basis also strengthened on increasing demand. Kuwait Petroleum Corp (KPC) sold one LR1-size cargo loading on Mar 24-26 at a premium of around $30/mt to the quotations on an FOB basis. This cargo was heard to be transported to new naphtha cracker in China.

LG Chem and Lotte Chemical shut down their naphtha crackers due to power outage on Feb 25 at around 9:45 a.m. Lotte Chemical resumed main power generation facilities within the same day and was expected to start up its naphtha cracker on Mar 1. It would confirm on-spec products on Mar 2. On the other hand, LG Chem seemed to be repairing facilities this week, but it was unclear when it would resume its naphtha cracker. LG Chem had issued a buy tender for naphtha on Feb 25 but cancelled it.

Middle distillates: 0.001% sulfur gasoil prices down because of more supply

The differentials for MR-size cargoes of jet fuel on an FOB Northeast Asia were unchanged. A market participant showed a view that market sentiment for April-loading cargoes would be soft due to more exports from China and South Korea. China state-owned oil firms maintained the operation rates of their refineries at high levels, so that they were expected to increase sales going forward. In South Korea, GS Caltex was planning to have regular maintenance activities at one of its crude distillation units from Feb 26 to Mar 27. After the refinery would finish turnaround as planned, it would increase exports from April again.

In this situation, WEPEC, CNOOC and UNIPEC in China moved on sales.

The differentials for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis were softening. Buying interest for cargoes loading in late March was retreating amid the backwardation market structure in the paper swaps market in Singapore. Meanwhile, increasing supply from Northeast Asia including South Korea put downward pressures on the market. Domestic demand in the country was sluggish and refiners were actively exporting volumes.

SK Energy in the country proved to have sold an MR-size cargo loading in late March at a discount of around 95cts/bbl to the quotations on an FOB basis.

Fuel oil: Oversupply concern slightly eases for FOB Korea LSFO

The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis went slightly up. Market players lowered their guard against excess supply to a certain extent. An oil firm aggressively sold very low sulfur fuel (VLSFO) in the bunker fuel market, removing fear a bit about excess inventory of 0.5%S fuel oil, which is a base material of VLSFO.

On Feb 26, a South Korea's oil company purportedly mulled shipping one MR-size cargo of low sulfur fuel oil (LSFO) for loading in early March. The company appeared to get increasing unprocessed fuel oil after one of its secondary units suffered troubles this week, said a source familiar with the matter.

The US Oil Major Phillipps 66 recently leased a floating vessel in Singapore. In Asia, fuel oil was often oversupplied. Thus, more and more fuel oil cargoes that were unable to find their outlets would flow into Singapore in the long run.