Gasoline: Narrower arb and poor SE Asia demand push prices down

The differential for MR-size cargos of 92RON gasoline on an FOB Northeast Asia basis went down. The narrowing arbitrage window from Asia to the US and weaker demand in Southeast Asia were considered as bearish factors. In addition, some market sources pointed out that cargoes loaded in the Middle East were headed to Asia including Singapore.

In the spot market, China state-owned Sinochem sold one 35,000mt cargo of 92RON Oxy grade gasoline for delivery into Singapore or Malaysia in August at a premium of around $2.00/bbl to the quotations on a CFR basis.

Naphtha: Markets softer with loose fundamentals

The first half September open-spec naphtha prices on a CFR Japan basis declined on week. A sense of loose supply/demand fundamentals extended. While supply was ample from other regions, inquiries for the material as a gasoline raw material lacked strength. In addition, a part of end-users was using LPG as petrochemical feedstocks. In this situation, a market participant showed a view that a part of trading houses, who had secured cargoes when disputes in the Middle East had worsened, might currently be promoting sales in the spot market.

In ethylene markets, China domestic market sentiments became softer. A concern about tight supply of ethylene had retreated after trades of ethane restarted between the US and China. When ethane carriers would approach China, operations of ethane crackers in the country were expected to return to normal and supply of ethylene was prospected to increase further going forward.

In China, PetroChina's Guangxi Petrochemical completed constructions of several facilities of refining and petrochemicals including a 1.20 mil mt/y new ethylene unit. This new ethylene unit would mainly use naphtha that was produced at the Guangxi Petrochemical's refinery. The refinery planned to have trial operations of them.

Middle distillates: Sales for gasoil expected to increase

The differentials for MR-size cargoes of jet fuel and 0.001% sulfur gasoil on an FOB Northeast Asia basis were unchanged on week. Sales for August loading emerged in China. China National Offshore Oil Corp (CNOOC) sold one MR-size cargo loading at Huizhou port in early August. According to market sources, the cargo was sold on a CFR basis, and the price was reportedly at a discount of about 50cts/bbl to the quotations in terms of an FOB basis. Its sulfur content was 0.001% was apparently purchased at a high price for blending purpose with gasoil due to the strong gasoil market. Recently, sales of low sulfur products were increasing from China. Rongsheng Petrochemical had sold one 0.001% sulfur cargo. In addition, Chinese oil companies might reduce jet fuel exports going forward increase exports of gasoil, for which the market was stable. Oil companies were now focusing on supplying gasoil from profitability perspective.

Fuel oil: Idemitsu Kosan selling late July-loading cargo

The differential for MR-size cargoes of 3.5% sulfur fuel oil on an FOB Japan basis was unchanged. Exports of fuel oil from Japan were witnessed on the back of refineries' troubles. Idemitsu Kosan was moving to sell 30,000mt of 3.5% sulfur fuel oil loading in late July from Yokkaichi, Central Japan. It was likely that some of its group refineries had turnaround or troubles. Meanwhile, a refiner in South Korea had looked for an MR-size cargo of 3.5% sulfur fuel oil loading in Augusts.