Gasoline: Buying interest expected to increase from Japan

　The differential for MR-size cargos of Non-oxy gasoline on an FOB Northeast Aisa was unchanged. Market sentiments were currently capped due to slack fundamentals. However, it was pointed out that demand was expected to increase toward the summer driving season going forward and it would likely push the markets up. In Japan, ENEOS had already sold one MR-size cargo loading in Kawasaki in the first half April. Other refiners seemed not to sell the fuel. Idemitsu Kosan was planning maintenance activities at some refineries during May and July. The oil firm was additionally having a glitch at a secondary unit at the Hokkaido refinery at present. However, according to a trader, considering recent refining margins for the fuel, it would be more profitable for Japanese oil companies to import gasoline from South Korea, a neighbor country than to refine the fuel themselves.

Naphtha: Supply expected to increase

The second half May open-spec naphtha prices on a CFR Japan basis softened. Tight supply/demand fundamentals were retreating. It was heard that supply would probably recover as turnaround was finishing at some refineries in Europe, the US and China. A market participant pointed out that end-users in China might be decreasing interest in imports when they would be able to secure feedstocks in the domestic market going forward. Strong buying interest for China had been one of the bullish factors for the market until talks on cargoes for delivery in the first half May.

Middle distillates: Jet market weakens with strong sales from China

The differential for MR-size cargoes of jet fuel on an FOB Northeast Asia basis went down. The market was weakening due to strong selling pressures from China. The inflow of Indian cargoes into Asia was also a bearish factor. Dalian West Pacific Petrochemical Co Ltd (WEPEC), a subsidiary of PetroChina Co, sold one MR-size cargo loading on Apr 26-28 through a tender closed on Tuesday. The buyer was unknown. China International United Petroleum & Chemicals Co (UNIPEC) also sold one MR-size cargo loading on Apr 22-24

The differential for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Aisa basis went up on strong buying interest and tightening supply. Idemitsu Kosan in Japan was showing buying interest for cargoes. The company had already procured at least three MR-size cargoes loading in April. The company was planning regular maintenance activities of its own and group companies' refineries between May to July. Among them, Fuji oil conducted unplanned shutdown of the 143,000bbl-per-day Sodegaura refinery from Mar 22 to 27, and it appeared that Idemitsu could not build up inventories before the maintenance activities of refineries. The Japanese refiner was also planning maintenance at some secondary units at its the 140,000bbl per day Hokkaido refinery and the 195,000bbl per day Chiba refinery during the summer season. Furthermore, the Hokkaido refinery had been declining the operation rates of secondary units since February, and it was said that the company decided to procure spot cargoes in a hurry.

Fuel oil: LSFO up on possible tighter supply

The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis went up. The market of low sulfur fuel oil (LSFO) firmed up due to tight supply expectations. South Korea's S-Oil was also set to suspend its secondary process equipment after SK Energy brought its residue desulfuriser (RDS) to a stop for regular maintenance activities. Following this move, a South Korea's oil firm purportedly have purchased 0.5%S fuel for bunker fuel. On top of that, market players saw an improvement margins for fluid catalytic cracker (FCC) units with the widening price gap between gasoline and fuel oil. A few oil companies were believed to throttle up FCC, getting less fuel oil to the market.