Gasoline: Productions decreasing with refinery TA in OZ

The differentials for MR-size cargoes of non-oxy gasoline strengthened on week. A sense of tight supply/demand fundamentals continued for non-oxy gasoline. In addition to Australia, a main outlet of non-oxy trade, buyers in Japan showed strong buying interest.
In Australia, buying interest remained strong. Production volumes of the fuel decreased because the 120,000bbl-per-day Geelong refinery was conducting turnaround at the residue fluid catalytic cracker (RFCC) until early October. In the meantime, according to a market participant, Australian market players started buying gasoline cargoes with sulfur content of up to 0.001%. In the country, the sulfur content in gasoline would be limited to a maximum of 0.001% from December this year. The market participant said that Australian players seemed to target to replace the contents of storage tanks two or three times.
In Japan, regular maintenance was scheduled at refineries in Kawasaki and Sakai going forward and some refiners planned spot procurements.

Naphtha: Market at standstill with fundamentals unchanged

The second half September open-spec naphtha prices on a CFR Japan basis were unchanged. Demand for the material did not increase while supply was expected to decrease.

Fixed prices for the material tended to decline recently and the price for ethylene was currently around $250 higher than that for naphtha. However, a market participant in Japan said, "This price spread is due to production cuts both domestically and overseas. It is possible that the price spread would become narrower if the operational rates would rise. No naphtha cracker was confirmed to raise the rates." In Northeast Asia like Japan, South Korea and Taiwan, several companies were reducing productions and a part of naphtha crackers that started operations this year was heard to be running at low rates.

In South Korea, the average operation rates of naphtha crackers in August were prospected to be at around 80%. YNCC decreased the operation rates since it had shut down the No.3 naphtha cracker. Hanwha TotalEnergies was heard to reduce the operation rates. Market participants believed that it might be because the company was having turnaround at its condensate splitters unit at present. On the other hand, Hyundai Chemical was maintaining the run rates at around 80% in order to build up inventories of petrochemical products before it would start regular maintenance of its naphtha cracker in Daesan from October.

Middle distillates: Jet market rises with unclear Sep-exports from China

The differentials for MR-size cargoes of jet fuel on an FOB Northeast Asia sharply increased. Buying interest of traders who were willing to secure cargoes was increasing as export volumes from China in September were unclear.
In China, most refiners had already used up their second batch of export quotas by now, while it was not clear when the third batch would be announced by the government. Thus, oil companies in the country seemed to have difficulties fixing their export plans in September.

In the spot market, one South Korean refiner sold one MR-size cargo at a discount of 30cts/bbl to the quotations for the cargo loading in early September, and at a discount of 50cts/bbl to the quotations for one loading in mid-September.

The differentials for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis declined. As the arbitrage window from Asia to Europe was shrinking, South Korean oil companies were shifting their sales to Asia. Additionally, Japanese oil companies were planning exports of large volumes from September onwards as malfunctions of refinery units were stabilizing. In these circumstances, the market price was capped by abundant supply within the Asian region.

Fuel oil: Supply for 0.5%S remains ample in Asia

The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis was unchanged. The market was quiet on Thursday with no fresh sales surfacing. However, the market sentiment was soft in Asia on the back of plentiful supply. Refiners in Northeast Asia were inactive to sell low-sulfur fuel oil. Inventories in Singapore stood high as more cargoes were flowing into the country from regions outside Asia.

On the other hand, sales by the 650,000b/d Dangote refinery continued. The company sold 130,000mt of low-sulfur straight run fuel oil loading on Aug 28-29 this week to Trafigura. The refinery had sold two 130,000mt cargoes to Trafigura in August including the one reported earlier. Operations of the residue fluid catalytic crackers were not smooth, and the company was planning to have turnaround in October. Therefore, it was expected that the refinery would keep selling low-sulfur fuel oil for the time being.