Gasoline: Prices rise on renewed crude oil supply concerns

　 The differential for MR-size cargoes of gasoline loading in Northeast Asia went up. With no positive progress seen in talks between the US and Iran, expectations for crude oil supply recovery from the Middle East faded. Due to crude oil supply concerns, concerns over petroleum product supply, including gasoline, were again realized, pushing up the market.

　 In the spot market, Sinochem sold an MR-size cargo of 92RON gasoline loading on Aug 21-23 from West Pacific Petroleum Co Dalian (WEPEC) refinery in a tender closed on last Thursday. According to several market sources, China's gasoline exports in August were expected to reach 600,000-650,000mt. It was also reported that inventories might be piling up due to weak domestic gasoline demand in China. According to the country's statistics, the highest export volume since the beginning of this year was around 530,000mt in January, while the most recent June exports were around 96,000mt.

　 The market for MTBE, a base material for oxy-grades, loading in China in September, was heard to be at $900-920/mt. Inquiries for Southeast Asia were reportedly strong. According to a market source, this was because many August-loading cargoes were sold to Europe and the US, resulting in a current decrease in available cargoes for Southeast Asia. In Southeast Asia, Hengyuan Refining Company (HRC) in Malaysia conducted a buy tender on Friday for 5,000mt of MTBE for delivery to Port Dickson on Sep 13-19.

Naphtha: Market rebounds amid naphtha demand expected to recover from LPG

　 The differential for open-spec naphtha (OSN) on a CFR Japan basis for H2 Sep delivery rebounded. Market views that the Strait of Hormuz blockade would not be lifted strengthened again, and concerns over naphtha and crude oil supply recovery receded. Reduced operating rates at Russian refineries due to drone attacks were also viewed as a bullish factor. Reportedly, due to a decrease in Russian naphtha, inquiries for non-Russian cargoes were seen for Southeast Asia and China. It was also heard that demand would shift from LPG to naphtha.

Meanwhile, in Northeast Asia, a number of petrochemical makers were seen implementing production cuts at naphtha crackers in the wake of high naphtha prices and the resulting deterioration in naphtha cracker economics. In South Korea, Hyundai Chemical had reduced cracker operating rates from 80% to 70% by Friday. In Japan, too, only one or two crackers are currently estimated to be operating above 80% of capacity. As previously reported, it was heard that at least four crackers in China had decided on production cuts of 5-10%.

Middle Distillates: Market extends losses amid some sales surfacing from Korea

　 The differentials for MR-size cargoes of jet fuel on an FOB Northeast Asia basis went up. Currently, limited sales volumes from Northeast Asian oil companies led to increased awardable prices. No tenders had emerged, and no sales from GS Caltex, which typically starts selling earlier, were observed.

　 The differentials for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis extended falls. Northeast Asian oil companies were hastening sales, anticipating future price declines. This was due to the expectation that crack margins would narrow going forward if supply concerns for both crude oil and petroleum products receded following progress in peace talks in the Middle East. SK Energy sold 600,000bbl loading on Sep 10-14 through private negotiations. Additionally, one South Korean firm sold two partial cargoes for mid-September loading. However. Meanwhile, as peace talks between the US and Iran faced back-and-forth developments, volatility in the Singapore futures market was high. Amidst this, some players were seen holding back from trading due to a wait-and-see stance.

　 In Japan, frequent refinery troubles occurred. At the 155,100b/d Osaka International Petroleum Refining's Chiba refinery) and ENEOS's 128,000b/d Marifu refinery, operations of crude distillation units were unexpectedly halted. Additionally, at Idemitsu Kosan's 140,000b/d Hokkaido refinery, a desulfurization unit trouble occurred, leading to a reduction in CDU operations. Following these troubles, some oil companies were implementing cargo allocation adjustments for August-loading products, but there was no movement for imports from overseas.

Fuel Oil: China imports likely to increase

　The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis unchanged. However, market sentiment was strong due to some bullish factors witnessed in the market. Amidst continued tightness in low sulfur fuel oil supply due to uncertainty over the Middle East situation, information was received that Chinese oil companies had recently increased imports of fuel oil cargoes as feedstock for secondary units. In China, crude oil imports from the Middle East had significantly decreased, potentially leading to a feedstock shortage.

On last Thursday, in the market, Formosa Petrochemical Corp (FPCC) in Taiwan closed a sell tender for 40,000mt of 0.5% sulfur fuel oil loading in the first half September, and PRefChem in Malaysia closed a sell tender for 500,000bbl of low sulfur straight run fuel oil (0.5%S) loading on Aug 12-13.