Gasoline: Market strengthens on expected tight fundamentals

The differential for MR-size cargos of 91RON gasoline on an FOB South Korea basis and 92RON gasoline on an FOB Japan basis went up as supply/demand fundamentals were expected to tighten. In the spot market, available cargoes for July-loading were prospected to be limited. On the demand side, buying interest emerged from Japan.

PetroChina had sold one MR-size cargo of 92RON loading in Chiba, Japan in the first half July by Jun 12 in the spot market. In Taiwan, CPC Co sold one MR-size cargo of 95RON loading in the first half July.

On the demand side, one oil firm was heard to be seeking gasoline cargoes for late June-loading and early July-loading in South Korea.

Naphtha: PRefChem conducting start-up works

The differentials for the second half of July-delivery open-spec naphtha were unchanged. In Northeast Asia, several naphtha crackers continued to reduce productions in Japan, South Korea and Taiwan and demand was capped as well. In the meantime, the price gap between naphtha and butane tended to widen, so that a part of end-users was seeking butane in the spot market. On the other hand, the gasoline demand season was approaching in a part of regions in the Northern Hemisphere. When the gasoline markets would be stronger, the naphtha markets might be supported.

LG Chem in South Korea bought 25,000nt of open-spec naphtha for delivery in the second half of July and the second half of August at a premium of around $6/mt and at a discount of 70cts/mt to the second half June quotations on a CFR basis via a tender closed on Wednesday. On Thursday, Lotte Chemical conducted buy tenders for Daesan, South Korea and Indonesia.

Malaysia's PRefChem was reportedly conducting start-up operations of its naphtha cracker that was under turnaround from February this year. It had 1.30mil mt-per-year ethylene production capacity.

Middle distillates: Increasing supply weighs on 0.05%S gasoil market

The differentials for MR-size jet fuel cargo on an FOB Northeast Asia basis were slightly up on week as buying interest emerged in the spot market. In Taiwan, Formosa Petrochemicals Co(FPCC) sold one MR-size cargo loading on Jul 25-27 through a tender. It was pointed out that the cargo might have been bought at a slightly higher price by a European trader for the purpose to co-load with other products which would be headed to Australia. Most Middle Eastern and Indian cargoes were destined for Europe, and the volume for the Oceania region was limited. Given this environment, there were moves to secure Northeast Asian cargoes for the region.

The differential for MR-size cargoes of 0.05% sulfur gasoil on an FOB South Korea basis were weakened on increasing supply. Refiners in the region were increasing their supply on the back of firm market sentiment of this grade. FPCC sold 300,000bbl loading on Jul 18-22 through a tender. In South Korea, GS Caltex also sold several Jul loading cargoes.

Fuel oil: Prices capped by expectations of rising supply

The differential for MR-size cargoes of 0.3% sulfur fuel oil on an FOB South Korea basis was unchanged. The market was likely to be lower as supply was expected to increase, especially in Singapore. In South Korea, one oil company considered selling a 0.3% sulfur fuel oil of SR-size cargo as July loading. In these circumstances, the Singapore market would receive many European low sulfur fuel oil cargoes as blending feedstocks, which had been tight, from late June onward. As a result, the supply of low-sulfur fuel oil was likely to increase further in the future. In spot market, a trading subsidiary of Malaysia's state-owned Petronas Petco was moving to sell 300,000bbls of low sulfur fuel oil (0.7 to 0.8%S) for Jun 22-23 loading. In Taiwan, Formosa Petrochemical Corp (FPCC) was also expected to sell low sulfur fuel oil (1.5%S) for July loading.