Gasoline: Sinochem moves on a sale

The differential for MR-size cargos of 91RON gasoline on an FOB South Korea basis and the differential of 92RON gasoline on an FOB Japan basis weakened late last week. Buying interest for late July was likely to go down as price gaps between July and August tended to widen in Singapore market. Chinese companies started sales for July-loading cargoes. Freight rates were hovering at high levels. A market participant considered that overheated market sentiment caused by troubles at refineries in Japan tended to settle down.

China state-owned Sinochem moved on a sale for July-loading cargo in Quanzhou.

Naphtha: Wait-and-see mood prevailing

The first half August open-spec naphtha prices on a CFR Japan basis were unchanged. No fresh deals were heard in the spot market. A lot of players were staying in a wait-and-see stance due to a concern about choked supply from the Middle East. On the other had there were enough arbitrage cargoes from the Mediterranean Sea and the US.

On the demand side, buying interest was weak in Northeast Asia. In Japan, South Korea and Taiwan, several companies were continued to moderate production volumes of petrochemicals. In South Korea, one petrochemical company cut the operations rates of its naphtha crackers by 8% from May. In China, a market participant pointed out that it was hard for producers to raise the operations rates of naphtha crackers due to poor profitability while sales of ethylene were getting tight in a Chinese domestic market.

Middle distillates: expectation of more sales from China pushes Jet fuel markets down

The differential for MR-size cargoes of jet fuel on an FOB Northeast Asia basis went down late last week. South Korea and other oil companies were rushing to sell in anticipation of full-fledged sales of July loading cargoes from Chinese oil companies. Sales of July loading cargoes from Chinese refiners were expected to get into full swing in the future. Large volumes of Chinese exports were likely to emerge in June, which may put downward pressure on the spot market. The Singapore futures market was in the steep backwardation structure between July and August contract. The discussion level could become at a deeper discount for late July cargoes compared to those in the first half of July.

The differential for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis declined. Due to increasing supply, South Korean oil firms were engaged in selling in the spot market.

South Korea's Hyundai Oilbank sold two MR-size cargoes of 0.001% sulfur loading on Jul 13-15 and Jul 15-17 both at discounts of around 35cts/bbl to the quotations on an FOB basis via a tender closed on Wednesday. In the country, another refiner sold one MR-size of 0.001% sulfur loading in Ulsan on Jul 18-20 at a discount of 45cts/bbl to the quotations on an FOB basis.

Fuel oil: Downwards pressure continued due to increasing supply

The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis was stable. Supplies increased in the region and continued to put downward pressure on the market price. Cargoes inflows from other regions have been increasing since late June. There were some sales in the region. In Taiwan, Formosa Petrochemical Corp (FPCC) closed tender to sell 40,000 or 80,000mt of 0.5% sulfur fuel oil loading in the first half of July and 1.5% sulfur fuel oil (MCB) MR-size cargo loading on Jul 15-17 on Thursday. In South Korea, output from one oil company was increasing, which might generate spot sales for July loading. In the other regional trade, Kuwait Petroleum Corp (KPC) sold 130,000mt of 0.5% sulfur fuel oil from its 615,000b/d Al Zour refinery on Jun 28-29 to a Japanese oil firm through a tender.