Gasoline: Oxy gasoline prices up on steady demand for Mexico

The differential for MR-size cargos of Oxy gasoline markets went up due to stronger inquiries for Mexico. China state-owned PetroChina sold one LR1-size cargo of 92RON oxy-grade gasoline loading in Dalian in late May. The cargo was traded at a premium of $2.80/bbl to the quotations on a CFR Singapore basis. Mexico state-owned Pemex had bought 10 cargoes loading in April in the Asian market, so that oxy grade gasoline market sentiment became stronger. Mexican companies purchased gasoline in Asia instead of the US.

In Japan, ENEOS had not procured gasoline in the spot market although some troubles happened at several refineries. The oil firm shut down the 95,200bbl-per-day No.2 crude distillation unit at the Mizushima refinery B plant on Apr 24. According to a market source, it had a glitch at the fluid catalytic cracker (FCC) at the Mizushima refinery. The oil firm shut down the 26,000bbl-per-day residue fluid catalytic cracker (RFCC) at the Oita refinery to repair a glitch.

According to a trader, however, the company did not secure the fuel at present. A view was shown that the company was expected to domestically supply stocks instead of exports or buy cargoes from trading houses in the domestic market.

Naphtha: Continuing procurements from China push up markets

The first half June open-spec naphtha prices on a CFR Japan basis strengthened. It was perceived to be a bullish factor that demand for China remained steady. According to a market participant, Chinese importers such as WEPEC, UNIPEC and Wanhua Chemical were actively procuring cargoes in the spot market and with private negotiations. It was heard that Chinese end-users that could not import naphtha raised the operation rates of naphtha crackers.

In China, however, demand for naphtha would likely be capped going forward. An expectation emerged that the government would likely to exempt the US ethane from a counter tariff. As of Apr 25, the Chinese government did not announce anything. According to a source, however, a talk was said to have held between the government and end-users who use ethane as petrochemical raw materials. Import volumes of ethane in China were around 5.54 mil mt in 2024 and 5.51 mil mt of them was from the US which accounted for around 99% of all.

In case that the counter tariff was not imposed on the US ethane, end-users could reduce procurement costs for ethane and they would maintain the operation rates of ethene crackers at high levels.

GS Caltex in South Korea procured total two cargoes of 25,000mt of heavy full range naphtha B grade and C grade at a premium of $11.00-11.50/mt and at a premium of $$9.00/mt to the quotations on a CFR basis.

Middle distillates: ENEOS not show buying interest for gasoil

　The differential for MR-size cargoes of jet fuel on an FOB Northeast Asia basis softened. Market prices weakened by slack supply/demand fundamentals. Chinese companies started full-fledged sales of May loading cargoes. On the demand side, buying inquiries from Australia and New Zealand had been almost filled and buying interest was limited. Meanwhile, PetroChina finalized its export plan in May. Jet fuel exports were expected to be a total of about 800,000mt, almost the same volume as in April. Other oil companies were also planning to start full-scale spot sales going forward.

The differential for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis went down. Purchases by Japanese players were settling down, and the market was pushed down. The South Korean government made a decision to extend the tax cut policy on oil products until the end of June. However, the cut rate would narrow down to 15% from current 23% for gasoil and LPG in May onward amid declining crude oil prices. The rate for gasoline would also shrink to 10% from current 15%. Some refiners in the country were planning to export more volumes as domestic demand was expected to retreat in May onward.

Meanwhile, purchases by Japanese players were likely calming down. ENEOS had some troubles at several refineries but the company was not planning to secure volumes to make up for shortage of oil products. Idemitsu Kosan seemed to have secured enough volumes for the time being before turnaround of its refineries. Thus, the market was likely to be pushed down by strong selling pressure. Procurements of cargoes for Australia or New Zealand were also settling down.

Fuel oil: Supply from other regions to Asia attracts attentions

The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis was unchanged from a day before. Amid supply/demand fundamentals balanced, market players were focusing on cargoes from regions outside Asia. Supply within Asia was limited due to turnaround of refineries and less productions on the back of shrinking refining margins. On the other hand, demand for bunker fuel was sluggish.

In Northeast Asia, however, some independent refiners in Shandong, China were showing their buying interest in low-sulfur fuel oil as feedstock of their secondary units, while some refiners in South Korea were considering purchases for bunker fuel. PetroChina was carrying 130,000mt of 0.3-0.4% sulfur fuel oil loading in Brazil in early April to Asia, and the cargo was expected to be brought into Singapore or China, of which final destination had yet to be fixed.