Gasoline: Wide arbitrage pushes markets up

The differential for MR-size cargos of 91RON gasoline on an FOB South Korea basis and 92RON gasoline on an FOB Japan basis increased. The widening arbitrage window for other regions pushed up the markets.

No fresh deals were heard for July-loading cargoes in the spot market. Oil firms in the region like South Korea and Taiwan were considering exports plans. One oil company said that prices on an FOB basis were likely to be pushed down by rising freights rates of MR-size vessels. On the other hand, it was reported that freight rates for LR-size vessels did not rise a lot.

CPC Co in Taiwan started turnaround at its 100,000bbl-per-day (b/d) crude distillation unit at the 350,000 b/d Dalin refinery. The maintenance was scheduled to last until early July.

Naphtha: Increasing supply pushes down prices

The differentials for the second half of July-delivery open-spec naphtha weakened. Supply was expected to increase as the regular maintenance season finished. According to sources, the arbitrage cargoes for July-delivery in Asia increased from the Mediterranean Sea compared to Jun-delivery cargoes.

On the other hand, demand did not widen. Although production activities of naphtha crackers were expected to recover in Southeast Asia, YNCC in South Korea decreased operation rates of the naphtha crackers by around 5% from May.

LG Chem in South Korea bought 25,000mt of open-spec naphtha for delivery in the second half July at a premium in the mid-$6/mt on a CFR Yeosu basis and at a premium of $7.25/mt on a CFR Daesan basis to the second half June quotations via a tender closed on Jun 4.

Middle distillates: Japanese oil firm buys June-loading jet fuel

The differentials for MR-size cargoes of jet fuel on an FOB Northeast Asia basis were unchanged on week. No spot sales for July-loading emerged from South Korean oil companies. They were making their sales plans in the month, and it was a little too early to start moves on sales of cargoes. It was possible that refiners would continue to buy cargoes loading in July. ENEOS and Idemitsu Kosan were possibly going to procure cargoes for the US market.

In the spot market in June, some traders pointed out that ENEOS and Idemitsu Kosan in Japan had secured several cargoes for loading in Northeast Asia. Idemitsu was said to have procured at least two to three MR-size cargoes loading in China and South Korea.

The differential for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis slightly went up. While selling interest for cargoes loading in July stayed thin, a trader who was in a hurry to secure cargoes bought some in Northeast Asia, which pushed up the market. In Taiwan, CPC Co also sold 300,000bbl loading on Jul 1-15 through a tender closed on Wednesday at a premium of around 30cts/bbl to the quotations on an FOB basis. The cargo was believed to have been traded at a high price due to its long laycan. It was also informed that its buyer was ENEOS in Japan.
　

Fuel oil: Fundamentals for high sulfur getting tight

The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis was unchanged. Sales by other refiners loading in June were not seen. However, some sellers were considering increasing their sales of low-sulfur fuel oil loading in July onward on the back of favorable refining margins, and it was expected that spot supply would increase.

The differential for MR-size cargoes of 3.5% sulfur fuel oil on an FOB Japan basis was stable as well. However, supply/demand fundamentals of high sulfur fuel oil were likely to be getting tight in Asia. In the Middle East, demand for power generations stayed firm amid higher temperatures. Meanwhile, supply concerns were arising in the Middle East as the geopolitical risks were increase as the Iranian government declined the US proposal over the nuclear development issues.