Gasoline: Ampol conducting TA at desulfurization unit

　In talks on gasoline, the differential for MR-size cargos of 91RON gasoline on an FOB South Korea basis and the differential for 92RON gasoline on an FOB Japan basis advanced. In the southern hemisphere, the summer demand season was approaching. Demand for Australia was expected to be at the same levels compared to a usual year. In the country, regulations on the maximum sulfur content were scheduled to be strengthened to 0.001% in December. It was possible that Ampol's 110,000 bbl-per-day (b/d) Lytton refinery would delay to finish turnaround of a de-sulfur-related equipment till next year. A market source said that the oil company might need to import low sulfur gasoline cargoes while conducting turnaround. On the other hand, Viva Energy's 120,000 b/d Geelong refinery would finish maintenance activities of its hydrotreater within this week, so that the oil firm could adjust the strict regulations.

In the spot talks, one MR-size cargo of 92RON gasoline for mid-December loading was traded at a premium of high 2's/bbl to the quotations on an FOB Chiba, Japan basis.

Naphtha: Korea companies reduce operational rates

The second-half December open-spec naphtha prices on a CFR Japan basis were unchanged. A concern that supply from Russia would be squeezed continued. In China, one new naphtha cracker was scheduled to start up and inquiries were expected to increase.

On the other hand, a movement of reducing the operational rates emerged in South Korea. One petrochemical company was reported to have decreased the operation rates of its naphtha cracker from 90% to 86%.

LG Chem, which was conducting turnaround of one naphtha cracker in the Daesan plant, was said to have decided to decrease the average operational rates of two naphtha crackers in Daesan and Yeosu by 5% from the initial plan after finishing turnaround in Daesan. Hyundai Chemical was reported to be considering to postpone the maintenance schedules of its naphtha cracker in the Daesan plant.

A market participant predicted that supply/demand fundamental might not be lose balance going forward because refining capacity of naphtha currently reached the top.

Middle distillates: Exports from China expected to increase

The differentials for MR-size cargoes of jet fuel on an FOB Northeast Asia basis were stable. A market source said that the Chinese government had accepted the requests by four oil companies in the country to shift the export quotas of low-sulfur fuel oil into oil products. Because of this, as earlier reported, PetroChina would replace 360,000mt of the quotas of low-sulfur fuel oil with oil products, following by Sinopec at 200,000mt, by China National Offshore Oil Co (CNOOC) at 50,000mt, and by Zhejiang Petrochemical at 30,000mt. Each oil firm was likely to increase jet fuel exports due to high refining margins and domestic demand of the fuel. It was pointed out that supply would increase in December onward.

The differential for SR-size cargoes of kerosene on an FOB South Korea basis was unchanged. Supply/demand fundamentals of kerosene in Japan were gradually tightening. Taiyo Oil was suffering from malefactions at an equipment related to the crude distillation unit at its 138,000b/d Shikoku plant. Thus, the company was reducing its supply to the domestic market.

The differentials for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis showed no changes on week. Supply from China was possibly going to increase. A market source speculated that the volumes could be as many as those in July and August when crack margins of gasoil stood high. According to data by the Chinese government, the export volumes of gasoil in July were at 817,937mt and those in August at 935,866mt.

Fuel oil: JPN refiner willing to sell cargo

The differential for MR-size cargoes of 3.5% sulfur fuel oil on an FOB Japan basis stayed in the same level. However, the market lacked upward momentum as a sense of ample supply was not eased in Asia. Inventories in Singapore remained high. Amid this, Cosmo Oil Co planned to sell a cargo of 3.5%S fuel oil(380cst) loading in December on the back of a trouble of the coker at the 100,000bbl of Sakai refinery. The company prioritized supply to the domestic bunker oil market, although it also planned to sell a fuel oil cargo from next week.