Gasoline: GS Caltex sells late Sep-loading cargo

The differential for MR-size cargos of 91RON gasoline was stable from the previous day. However, market sentiment remained steady due to tight supply/demand fundamentals. Inquiries for Australia remained strong. On the supply side, export movements by Chinese oil companies were unclear for September-loading and market players were concerned about short supply.

In the spot talks, GS Caltex in South Korea sold a cargo via a tender. Both 91RON and 98RON were to be co-loaded into an MR-size vessel. This cargo would be headed to Australia.

Naphtha: Korea to reconstruct petchem industry

The first half October open-spec naphtha prices on a CFR Japan basis declined. The overheated market was eased. Buyers were staying in a wait-and-see stance as futures prices had sharply gone up.

Vietnam's Long Son Petrochemical (LSP) restarted its 950,000mt-per-year ethylene unit by Aug 18. Siam Cement (SCG), a parent company of LSP, was in charge of procurements for naphtha for LPS. There were different views about procurements by SCG going forward. A market participant mentioned that the company was able to internally secure naphtha, but another source said that procurements by SCG might increase going forward.

In South Korea, on the other hand, the government announced that it had reached an agreement with 10 petrochemical companies to reconstruct the domestic petrochemical industry including reductions of ethylene productions capacity. They targeted to cut up to 3.70 mil mt-per-year ethylene production capacity. The government asked them to submit the reconstructing plans by the end of this year. According to a market participant in the country, however, there was no coercive force behind the goal of reducing ethylene production capacity, and the only benefit was that some policy advantages would be given if the reduction was achieved. The participant said that it was unclear how they would react to the agreement.

Middle distillates: Gasoil market softens amid some sales seen from Korea

The differential for MR-size cargoes of jet fuel on an FOB Northeast Asia was slightly up. Selling interest from Chinese refiners was limited. Meanwhile, buying interest from Australia and Japan emerged, and that pushed up the market. GS Caltex had already sold two MR-size cargoes loading in early September. In China, Rongsheng Petrochemical closed a tender to sell 300,000bbl loading on Sep 18-20. Sales from China remained limited. Oil companies in the country could not move to sell certain quantities of jet fuel until the government would announce the third export quotas of oil products.

The differentials for MR-size cargoes of 0.001% sulfur gasoil on an FOB North East Asia went down. Sales from South Korea were witnessed, and increasing supply pushed down the market.

No sales were heard from Japan, but a trader viewed that a refiner would move to sell cargoes in the near term. ENEOS was planning to resume the operations of the crude distillation unit at its 141,000b/d Sakai refinery at the end of August, and its supply in West Japan seemed to be recovering. On the other hand, Idemitsu had earlier planned to export some MR-size cargoes loading in September. However, the volume could decline as its 165,000b/d Aichi refinery was scheduled to be shut down for regular maintenance activities soon.

Fuel oil: Purchases from Taiwan continue

The differential for MR-size cargoes of 0.3% sulfur fuel oil on a CFR Japan basis was unchanged on week. The market was at a standstill as purchases of spot cargoes had not been seen in Japan. Power companies in Japan were still prioritizing buying liquefied natural gas or coal for fuels due to their relatively low prices, and were curtailing to buy fuel oil. In addition, supply in the country was ample in the country, and no spot imports by Japanese trading houses were observed.

In Northeast Asia, CPC Co continued to buy cargoes since the summer power demand season had started. The refiner usually supplies imported cargoes to Thaipower. CPC bought 36,000mt of 0.3% sulfur fuel oil for delivery on Oct 1-31 through a tender. The company, on the other hand, sold 35,000mt of 0.35% sulfur fuel oil loading on Aug 27-31. CPC had lowered the operation rates of its 350,000b/d Talin refinery due to malfunction of the 80,000b/d residue fluid catalytic cracker, and it had surplus volumes of fuel oil to export.