Gasoline: Talks on cargoes for Vietnam progressing

　The differentials for MR-size cargos of gasoline on an FOB Northeast Asia basis unchanged. No fresh sale was heard in the spot market from Northeast Asia. Oil companies in China and South Korea prioritized supplying the fuel into the domestic market. Thus, available cargoes for sales in the spot market were expected to be limited.

In Southeast Asia, talks on cargoes loading in Singapore or Malaysia were heard to be progressing for Vietnam. According to market sources, discussion levels were at a premium of around $20/bbl to the 92RON quotations in Singapore futures market on a CFR Vietnam basis. Details such as research octan number and cargo volumes were not disclosed. Meanwhile, a bid was shown for cargoes loading in South Korea, but no deal was concluded at present, it was heard.

The differential for SR-size cargoes of 90RON gasoline on an FOB South Korea basis was unchanged. In Japan, a main outlet for cargoes from South Korea, the operational rates of refineries declined to low 70's%. The operational rates were pointed out to possibly go down further due to a shortage in crude oil. In Japan, strategic petroleum reserve (SPR) had been decided to be released. According to market sources, however, supply for bunker oil for tankers was getting tight, so that it was possible for part of oil companies to take times to pick up the SPR.

In this situation, one Japanese trading house was heard to have secured imports of the fuel from South Korea in April. A size of tankers and volume were not revealed.

Naphtha: Sell tender for 2H Mar, 1H Apr issued from Peru

The first-half May open-spec naphtha prices on a CFR Japan basis was going up. Supply concerns became stronger as affairs in the Middle East disrupted more. No fresh deal on a CFR basis was heard. Trading houses seemed to be active to secure cargoes in other regions in order to supply the material to end-users with term contracts. In the other regions, a sell tender for the second-half March loading and the first-half April cargo surfaced from Peru and closed on last Thursday and its cargo size would be an MR-size vessel.

In talks on olefins, spot sales for ethylene tended to increase in Northeast Asia and Southeast Asia. According to a market participant, prices for derivatives did not gain compared to a rise in prices for ethylene, so that petrochemical companies in Asia seemed to try avoiding negative margins by stopping derivatives facilities and selling ethylene. In this situation, Zhenjiang Petrochemical (ZPC) in China had sold ethylene this week. A trading house mentioned that the cargo would go to Japan.

As for facilities, Malaysia's PRefChem was shutting down its naphtha cracker since Mar 11. In addition, the refinery was also stopping its crude distillation unit, that supplied naphtha for the naphtha cracker, to repair minor issues. According to a market source, when the cracker restart would depend on procurements programs of crude oil and naphtha.

Middle distillates: Jet prices gain on strong buying interest for Apr cargoes from Korea

The differentials for MR-size cargoes of Jet fuel on an FOB Northeast Asia basis went up on strong buying interest. Market players in Japan and Australia were willing to buy cargoes loading in April from South Korea. Multiple sales from South Korea surfaced. One major oil company sold one MR-size cargo for early April loading by Thursday. Market players reported that Australian players purchased at a premium of more than $30.00/bbl to the quotations on an FOB basis. 　Also, sales of one MR-size cargo for mid-April loading from Northeast Asia surfaced. Negotiations were reportedly underway with Japanese players at a premium of around $20.00/bbl to the quotations on an FOB basis.

The differentials for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis strengthened on tight supply/demand fundamentals in Asia. South Korean oil companies were prepared to raise run rates at their refineries and plants to the maximum after releasing crude oil reserves. However, the increased product supply would reportedly be used to stabilize domestic supply, making it impossible to promote exports. South Korean oil firms reported that strong buying interest from Australia persisted. Also, several Japanese refiners appeared to be showing buying interest in April-loading cargoes. Among Japanese players, some continued looking for South Korean products while also checking markets for arbitrage cargoes from the US and elsewhere. Australian players were trying to cover domestic supply by increasing purchases from outside the region, such as US products. Japanese oil companies and others were also in a situation where they were made to maintain term contracts for Australia. Some market players noted that if a gasoil shortage would occur in Australia, heavy machinery would be unable to operate, which would also impact coal and natural gas mining.

Fuel oil: Purchase from Taiwan appears

The differential for MR-size cargoes of 0.5% sulfur fuel oil　on an South Korea basis was at a stable. Selling movements were poor and the spot market remained quiet. Petroleum companies in Northeast Asia including South Korea prioritized supply for the domestic market and there were few cargoes in the market. South Korean government decided to release national crude oil reserves for securing supply for the country and avoiding a price increase. It also restricted export of petroleum products. GS Caltex Corp postponed turnaround of its refinery in May. Four petroleum companies operated at full capacity.

Some petroleum companies in Japan and South Korea considered buying fuel oil cargoes for feedstocks of secondary units at their refineries and bunker oil due to concerns over supply of crude oil. But they had not moved to procure cargoes because of the surging fuel oil market and difficulty of securing cargoes. CPC Corp in Taiwan conducted a tender to buy 37,000mt of 0.3%S fuel oil arriving in Apr 26-Jun 5. The tender was closed on Tuesday and the price validity date was set on Mar 19.