Gasoline: Sentiments steady due to decreasing stocks in SG

Non-oxy gasoline markets were stable in Northeast Asia. However, Market sentiment was steady as the gasoline demand season was approaching. A market source said that stock levels for the fuel were declining in Singapore and a sense of tight supply/demand fundamentals was emerging. In Taiwan, talks on cargoes loading in June started. CPC Co conducted a sell tender for one MR-size cargo of 95RON loading in June. Formosa Petrochemical Corp (FPCC) was expected to have available cargoes for exports in June and seemed to be considering sales plans at present. FPCC conducted an annual term sell tender for 92RON gasoline (0.001%S) from June this year to May next year. The price validity was set on May 23.

In Japan, ENEOS had procured some MR-size cargoes for delivery in the second half May because of troubles at the 249,100 b/d Kawasaki refinery and the 200,200 b/d Mizushima refinery B plant.

Naphtha: Arb volume from EU expected to decrease

The second half June open-spec naphtha prices on a CFR Japan basis gained on week. A market participant said that it would probably support the markets that demand as a gasoline raw material would increase toward the gasoline demand season.

In the meantime, the Dangote refinery in Nigeria did not smoothly produce gasoline due to a glitch at a secondary unit, so that refineries in Europe were expected to actively produce gasoline to export it to Africa. Thus, the arbitrage volume from Europe to Asia was also considered to be capped.

GS Caltex in South Korea bought total five cargoes of heavy full range naphtha for delivery in the second half of June via a tender closed on Thursday. The awarded prices for cargoes exported from Skikda, Algeria were at a premium in the high $10's/mt, those for a cargo of C grade were at a premium of around $15/mt and those for a cargo exported from Duqm, Oman were at a premium of $7.75/mt to the quotations on a CFR basis. The premium for heavy grade became wider on week due to the expectation that the arbitrage from Europe would decrease.

Middle distillates: FPCC sells 750KB gasoil cargo of late June-loading

The differential for MR-size cargoes of jet fuel on an FOB Northeast Asia basis strengthened. Market sources viewed that the market had been undervalued due to a recent decline in crude oil prices and deep discounts for jet fuel. It was also perceived to be a bullish factor for the market that the arbitrage window from Asia to the US West Coast was open. In Taiwan, Formosa Petrochemicals Co (FPCC) sold an MR-size cargo loading on Jun 1-5 via a tender. It was pointed out that the buyer was possibly going to bring the volume to Australia along with term volumes.
The differential for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia went up. In Taiwan, Formosa Petrochemicals Co (FPCC) sold 750,000bbl of 0.001% sulfur gasoil loading on Jun 21-25 at a discount of 5cts/bbl to the quotations on an FOB basis. Meanwhile, sales of June cargoes from Northeast Asia were limited. Refiners in South Korea had yet to issue any tenders for cargoes loading in June. Refiners in Japan were reluctant to sell cargoes due to turnaround of their refineries, so that market stayed firm.

On May 1, the Mediterranean Sea was designated as Emission Control Area (ECA), and vessels that sail in the sea need to use low-sulfur marine gasoil oil with sulfur content of less than 0.1%. However, no changes of supply/demand fundamentals of gasoil were witnessed after the designation.

Fuel oil: 0.5%S on FOB Korea goes up on thin stock level in SG

The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis went up. A sense of thin supply strengthened as inflows of cargoes from regions outside Asia were declining.

Offers for June cargoes were heard at a premium of over $12.00/mt to the quotations on an FOB Singapore basis on the back of extremely low inventories in the country. End-users seemed reluctant to buy cargoes due to the high physical prices. In addition, some refiners in Northeast Asia were filling their necessary volumes by producing gasoil at their own refineries.