Gasoline: Market strengthens amid inquiries for OZ surfacing

　 The differential for MR-size gasoline on a FOB Northeast Asia basis for non-oxy grade went up.

　Inquiries for cargoes to Australia were witnessed in the market, leading to a wider premium. Multiple inquiries were heard, but no deals had been concluded due to a lack of available cargoes for sale.

　Market sources viewed that traders with term contracts for Australia might be moving to short-cover due to a glitch at South Korean GS Caltex's 800,000b/d Yeosu refinery in its RFCC unit.

　In discussions for oxy-grade cargoes, Mexico state-owned Pemex was reportedly looking for cargoes in Asia. However, no deals were heard. According to market sources, it was more economical to move cargoes for Mexico's Pacific coast from Asia rather than from the US Gulf Coast.

Naphtha: Increasing supply from Russia and India caps market

　The second half June open-spec naphtha prices on a CFR Japan basis went down due to ample supply in the market. Traders viewed that supply/demand fundamentals for the second half June cargoes eased, as cargoes from outside the region, such as the US and Europe, arrived for June delivery all at once. Another trader reportedly said that Russian cargoes were flooding the market.

　In the spot market, Japan's Mitsubishi Chemical conducted a buy tender that closed on last Thursday for two 25,000mt cargoes of open-spec naphtha for delivery to Kashima on Jul 10-24 and Jul 16-29. It was reportedly possible to take delivery of 50,000mt at once between Jul 16-24.

　South Korea's Lotte Chemical also conducted a buy tender on Thursday for 25,000mt of open-spec naphtha for delivery to Yeosu and Daesan on Jun 16-30. Market sources said that demand was for one cargo for Yeosu and two cargoes for Daesan.

　According to a survey by Rim Intelligence, Chinese state-owned refineries' run rates in April were 72.5%, down 10.8 percentage points from March. Market sources said that the country's crude oil imports in April had reportedly decreased significantly. However, while refinery run rates decreased, there was reportedly no sign of increasing naphtha import interest.

　In China, ethane crackers were operating robustly, and propane dehydrogenation (PDH) unit run rates were expected to be raised to 70% in June. Olefins were also being produced from methanol, and there was no sense of tightening in domestic olefin supply/demand fundamentals.

Middle distillates: Jet market goes up as buying interest for US continues

　The differentials for MR-size jet fuel on an FOB Northeast Asia basis went up. The differentials for cargoes loading in mid-June were pushed up due to continuous buying interest. It was also perceived as a bullish factor that the arbitrage window from Asia to the US West Coast remained open. Numerous sales emerged from South Korean market players. GS Caltex sold one 300,000bbl cargo loading on Jun 9-15 via a tender closed on last Thursday at a premium of $4.00/bbl to the quotations on an FOB basis. It was pointed out that the cargo might be directed to the US.

　The differentials for MR-size 0.05% sulfur gasoil on an FOB Northeast Asia basis substantially went up. Limited supply spurted the market. Formosa Petrochemical Corp (FPCC) sold 450,000bbl loading on Jun 16-20 via a tender closed on last Thursday at a discount in the range of $3.00-4.00/bbl to the quotations on an FOB basis. Meanwhile, no sales emerged from South Korean players. As reported earlier, SK Energy and GS Caltex halted new sales of high-sulfur gasoil due to thin inquiries from Vietnam, their key destination. It was also pointed out that buying interest for cargoes from Taiwan could emerge more easily as a result.

Fuel oil: CPC considers selling Jun VLSFO

　The differential for MR-size 0.5% sulfur fuel oil on an FOB South Korea basis unchanged. There were both strong and weak factors in the market. Uncertainty was prevailing in the market going forward.

　Inventories of feedstocks for low sulfur fuel oil were enough in the region, a supply shortage of finished products for bunker oil did not disappear. On the other hand, demand for bunker oil remained weak. A sign of an increase in demand of lows sulfur fuel oil for power generation did not arise in Northeast Asia including Japan despite the approaching summer peak demand season for power.

　CPC Corp in Taiwan was considering selling low sulfur straight-run fuel oil loading in June due to a trouble of a secondary unit. However, it had yet to be offered for sale at this stage. The company stopped operation of the residue fluid catalytic cracker (RFCC) at its 350,000b/d Talin refinery due to a fire occurred in late April. The damage was severe, and resumption was expected in July-August at the earliest.