Gasoline: Idemitsu shuts down reformer at Tokuyama

The differential for MR-size cargos of 92RON gasoline on an FOB Northeast Asia basis was unchanged. However, market sentiment was steady. Mexico state-owned Pemex had bought more than 10 cargoes loading in April in the Asia market and sentiment remained firm.

In Japan, ENEOS was heard to be looking for the fuel of MR-size cargoes in the international market. In the meantime, the oil firm would probably secure cargoes from other refiners in the domestic market.

Idemitsu Kosan shut down the 22,000bbl-per-day reformer at its Tokuyama plant on Apr 24 due to a leak of LPG. The company was shutting it down because it did not finish inspections as of Apr 28. It was not clear when it would resume its operations.

Naphtha: Prices down on uncertainty about demand outlook

The second half June open-spec naphtha prices on a CFR Japan basis weakened. Many market participants believed that demand from China would weaken. In the meantime, there were concerns that demand for petrochemical products could decrease due to an economic slowdown. Thus, a sense of uncertainty about demand outlook was prevailing.

There were views that China would exempt US imports of ethane from tariffs. As a result, earlier expectations receded that the Chinese end-users would increase procurements for naphtha instead of ethane imports from US. A market participant said that the China's purchases of naphtha from June arrival onward would lose momentum although they had actively bought naphtha for delivery in May after the government announced counter tariffs on US imports.

Middle distillates: Strong selling interest by Chinese players causes weaker Jer market

　The differential for MR-size cargoes of jet fuel on an FOB Northeast Asia basis softened. Sales for cargoes from China were heard one after another. The arbitrage window from Asia to the US West Coast was shrinking as turnaround and unit troubles of refineries in the country were calming down. In addition, purchases for cargoes loading in May from Australia and New Zealand were settling down. Thus, supply/demand fundamentals were slackening. In China, UNIPEC moved on sales of a cargo loading from Qingdao on May 21-23 and a cargo from Nanjing in late May, and was still negotiating with traders. Exports of the fuel loading in May from China could reach 2.10 mil mt including volumes to Hong Kong. The volume with cargo exports was expected at around 1.40 mil mt. Amid stable operations of refineries in the country, exports in the month stood high.

The differential for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis was unchanged. However, the supply was low, and the market sentiment was steady. Thus, refiners in the country were increasing their shipment of oil products to the domestic market, and the number of spot cargos loading in May from the country seemed to be limited. Exports from China were also expected to be thin, so that market sentiment stayed strong. Some market sources said that total exports of gasoil from China would be at around 400,000mt in May. In Japan, refineries' troubles continued. Under the circumstances, ENEOS had buying interest in an MR-size cargo loading in late May. The refiner also seemed to be moving to procure gasoil in the domestic market from trading houses.

Fuel oil: VLSFO margins recover

The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis was unchanged. However, talks in the spot market were still quiet with only few cargoes. Refining margins of low-sulfur fuel oil were recovering, but it stood only at slightly lower than $9.00/bbl over Dubai crude oil, which was not high enough for refiners to produce more LSFO. No spot sales for cargoes loading in May were confirmed from Northeast Asia.

In South Korea, one of the refiners was considering a spot purchase of 05% sulfur fuel oil for delivery in June, but had yet to start buying one. The company filled bunker demand with imported volumes as its own productions were declining due to the margins in addition to some planned maintenance activities of some units such as desulfurization units going forward.

Amid the summer gasoline demand season approaching, some independent refiners in Shandong, China, earlier looked for low-sulfur straight run fuel or residual distillates for delivery from late May to June as feedstocks. However, no deals were reported to date.