Gasoline: Market down on backwardation

　The differential for MR-size cargos of 91RON gasoline on an FOB South Korea basis was falling. The market was pulled down by backwardation in the Singapore futures market. In the Singapore futures market, the intermonth spread between December and January constructs formed backwardation of $1.35/bbl. It was said to weigh on the awardable market prices.

In China, CNOOC sold 12,000mt of 92RON gasoline loading in Hainan on Dec 11-12. Formosa Petrochemical Corp (FPCC) in Taiwan conducted a sell tender for two MR-size cargoes of 92RON loading on Dec 12-16 and Dec 16-20.

Although the market prices became bearish due to the backwardation structure, supply was currently not surplus and it curtailed a decrease in the differentials. In South Korea, SK Energy was delaying the maintenance schedules of one residue fluid catalytic cracker (RFCC) at the 840,000 bbl-per-day Ulsan refinery. It was pointed out that the oil firm would possibly decrease exports by five or six MR-size vessels in December.

Naphtha: Retreading demand pushes market down

The second-half December light grade naphtha prices on a CFR Japan basis declined. Retreating demand pushed the market down. The operational rates of naphtha crackers tended to decline mainly in South Korea because of capped production margins of petrochemical products. One South Korean company decided to postpone the turnaround schedule of its naphtha cracker for nine days due to the economical reason.

In talks on ethylene, as reported before, the arbitrage cargoes were exported from the US to Northeast Asia. In Southeast Asia, ethylene cargoes were surplus and a part of them was transported to China.

In spot talks on naphtha, Lotte Chemical in South Korea bought 25,000mt of open-spec for delivery in the second half of December at a premium of $5.00/mt to the quotations on a CFR basis. It was heard that the delivery range was expanded.

In South Korea, GS Caltex procured 25,000mt of heavy full range from Skikda, Algeria.

Middle distillates: Tight supply causes sharp increase in gasoil prices

The differentials for MR-size cargoes of jet fuel on an FOB Northeast Asia basis were went up. Supply/demand fundamentals of jet fuel from South Korea were getting tight while inquiries for kerosene and jet fuel through term contracts or in the spot market were increasing. In addition, buying interest for cargoes with the high flash point to the US West Coast was also increasing, so that supply of usual spec of jet fuel was subdued.

The differentials for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis were strengthened. Amid demand for heating oil increasing, refiners in Northeast Asia and the Middle East had troubles at their refineries, and supply/demand fundamentals of gasoil was tight.

GS Caltex in South Korea closed a tender to sell two MR-size cargoes of 0.001% sulfur gasoil loading on Dec 5-9 and Dec 8-12. Ahead of this, the company had sold an MR-size cargo loading at the end of December at a premium of 20cts/bbl to the quotations on an FOB basis. Considering the recent steep backwardation between Dec/Jan contracts in the Singapore paper swaps market, cargoes from South Korea loading in mid-December could be traded at a premium of $1.10-1.20/bbl to the quotations on an FOB basis.

Fuel oil: Korea refiner has sales avail

The differential for MR-size cargoes of 0.5%S fuel oil on an FOB South Korea basis unchanged However, the market lacked upward momentum amid sluggish demand.

As reported before, inventories in Singapore remained high. On the other hand, in Northeast Asia, buying interest for low sulfur fuel oil was poor in China and so on. Chinese petroleum companies had enough export quotas of low sulfur fuel oil, and they were inactive to buy cargoes. Buying interest was also poor in Japan.

In the supply side, SK Energy in South Korea had room for exporting MR-size cargoes of 0.5%S fuel oil loading in December, although any deals were not heard.