Gasoline: Market softens all over with backwardation

　 The differentials for MR-size cargoes all went down. Buying interest for the second half September cargoes was retreating, in the wake of backwardation in Singapore paper swaps. Procurements for the second half September loading cargoes were perceived as risky, putting downward pressure on premiums.

Formosa Petrochemical Corp (FPCC) in Taiwan conducted a sell tender for two 250,000bbl cargoes of 92RON gasoline loading on Sep 13-17 and Sep 18-22. According to a market source, one company reportedly as awarded for both cargoes, which were expected to be co-loaded onto an LR2-size vessel. There was a prevailing view that they would be shipped to Singapore for blending purposes. In South Korea, one oil firm was heard to be moving on spot sales of both non-oxy and oxy grades. Exports from India to Singapore and Europe were also reportedly continuing.

　 In the trade for alkylate, which serves as a feedstock, FPCC sold 18,000mt for late Sep-loading at a premium in the range of $15.00-16.00/bbl to 92RON quotations on an FOB basis.

Naphtha: Trend of weaker light naphtha, firmer heavy naphtha"

　 Differentials for open spec naphtha for delivery in the first half October on a CFR Japan basis softened. Demand had temporarily declined due to naphtha cracker issues. In Japan, one naphtha cracker underwent an unplanned shutdown in August, and another experienced delays in restarting from regular maintenance. In September, another cracker was scheduled to halt operations for about a week for unscheduled repair work. In South Korea, one cracker in the Daesan area was also facing issues. As a result of these factors, light naphtha was seen to be temporarily in surplus.

　 Meanwhile, the market for heavy naphtha was firm. Robust gasoline and aromatics markets were believed to be supporting prices. Considering the firm heavy naphtha market, some South Korean players were reportedly procuring condensate and light crude to refine into naphtha and other petroleum products.

Middle distillates: Jet market falls with sales from China and South Korea seen

　 Differentials for MR-size cargoes of jet fuel loading in Northeast Asia basis went down. In the Singapore paper market, regrade, the price spread between jet fuel and gasoil, for the September contract remained in the negative territory. While gasoil supply/demand fundamentals were tight, jet fuel saw ample supply from China for August-loading and from South Korea for September-loading. Many market sources said that arbitrage window for late September-loading cargoes to the US and Europe was difficult, and purchases for destinations outside the region were also limited.

　 Differentials for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis fell too. Sales from South Korea and Taiwan had increased from last week, causing strong downward pressures on the market. Meanwhile, no fresh September loading sales emerged from Japan. Uncertainty surrounding peace talks in the Middle East continued to cause anxiety over crude oil procurement. Consequently, some oil companies were refraining from exporting petroleum products until the market direction was settled. In addition, the scheduled turnaround at refineries of ENEOS and Cosmo Oil since late August also contributed to the absence of new sales. The crude distillation unit at Osaka International Refining Co (OIREC) Chiba refinery (155,100 b/d) restarted operations on Aug 12. As the refinery had been shut down for about two weeks since early August, it was pointed out that delays in exports from the refinery were occurring.

Fuel oil: 0.5%S FO market surges with tight supply and buoyed buying from China

　 Differentials for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis surged. Buying movements appeared from China and prices surged amid tight supply in the regions.　Formosa Petrochemical Corp (FPCC) in Taiwan sold 40,000mt of 0.5%S fuel oil loading on Sep 21-23 via a tender. The destination was China including Hong Kong. Domestic products run short in China and oil companies increased imports of fuel oil cargoes for bonded bunker. Although oil companies in China raised operation rates of their refineries, they increased gasoline and middle distillates. For this reason, production of low sulfur fuel oil declined.