Gasoline: Oxy gasoline markets strengthen on fewer supply

　The markets of oxy-grade gasoline strengthened on tight supply.

　A market participant considered that supply capacity was getting thin due to turnaround and issues at refineries. There were views that the awardable prices for mid-April loading MR-size cargoes of 92RON oxy gasoline would be at a discount of around $1.80/bbl to the quotations on an FOB South Korea basis.

　In China, a spring maintenance season was expected to start this month. In addition, independent refineries in the country were running at low rates, so that state-owned refiners focused on domestically supply gasoline. According to a survey conducted by Rim Intelligence, the average operation rates of Shandong independent refineries were at 48.8% this month. It was heard that inventories of gasoline were turning into downward trend in Singapore.

Naphtha: OSN market goes up on active buying for China

　The first half May open-spec naphtha prices on a CFR Japan basis went up on strong buying interest for China.

　In this situation, YNCC in South Korea conducted a buy tender for open-spec for delivery in the first half of May on Wednesday. The company had issued a buy tender for the second half of April cargo last week, but cancelled it due to high offer levels. The levels were heard to be at a premium above $20/mt to the quotations on a CFR basis.

　In Taiwan, Formosa Petrochemicals Co (FPCC) sold 35,000mt of heavy grade for delivery in the second half of April via a tender. It was reportedly awarded to a trader a premium of $19.50/mt on an FOB basis to the quotations (Apr average). The company had lowered the operations of a reformer unit at its refinery amid softening BTX markets. Thus, it had ample inventories of heavy naphtha.

　ExxonMobil reportedly tried to start operations of its new naphtha cracker at the Huizhou petrochemical plant in China on Monday this week. However, the startup was heard to have failed due to some issues, some sources said. It was unclear how serious the troubles were and when the company would feed raw materials into the new naphtha cracker again. A market participant mentioned that the company was expected to exceed naphtha stocks, but did not move on resales and so on at present.

Middle distillates: Jet fuel market softens on poor inquiries

　The differentials for MR-size cargoes of jet fuel on an FOB Northeast Asia basis softened on poor inquiries. Buying interest in Asian regions was limited. In Japan, the kerosene demand season was almost over, and buying interest in jet fuel as alternatives of kerosene by Japanese refiners were weak. In addition, the US was hit by tornadoes and storms across the country since Mar 14, and it was speculated that this led to weak demand of the fuel going forward as flight cancellations were expected.

　Refiners in Northeast Asia were shifting to produce more jet and had more spot availability in April as the winter kerosene demand season was winding down. This week, some refiners in the region started sales of April loading cargoes. On Friday, GS Caltex in South Korea closed a tender to sell an MR-size cargo loading on Apr 22-26. On the same day, PetroChina also closed a tender to sell an MR-size cargo loading on Mar 30-Apr 1 from its subsidiary West Pacific Petroleum Co Dalian (WEPEC). The results of the tenders were still unknown. This week, SK Energy had also moved to sell cargoes loading in mid April, but the deals had yet to be confirmed. The company had previously sold an MR-size cargo loading on Apr 10-12 in the negative territory to the quotations. The cargo was believed to be headed to the US. On the demand side, due to rising freight rates for LR-size vessels, the arbitrage window from Asia to the outside regions remained closed, and inquiries for cargoes to the West became sluggish.

　The differentials for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia also weakened. Demand in Australia, one of the main outlets for cargoes from Northeast Asia, was weak. Demand for heavy machines for mining industries was getting thin due to heavy flood that took place in early March. In addition, due to the worsening political situation in the Middle East, some sellers tended to sell cargoes to Australia rather than the Middle East due to its safe voyages. Thus, inquiries for cargoes from Northeast Asia were retreating, and supply/demand fundamentals were slackening.

Fuel oil: VLSFO holds soft tone in Northeast Asia

　The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis showed no changes.

　According to a market participant familiar with the matter, Asia had weak appetite for bunker fuel oil, whereas it was likely to see more cargoes shipped from Kuwait's 615,000 barrel-per-day Al-Zour oil refinery, Nigeria's 650,000 bpd Dangote oil refinery in addition to Northeast Asia's refineries. "Oversupply concerns would dominate the market for some time," an industry source predicted.

　In the Middle East, Fujairah was believed to show increasing demand for bunker fuel, and might attract a few cargoes from overseas.