Gasoline: Trades of Sep cargoes continue

　 The differential for MR-size cargoes of gasoline on an FOB Northeast Asia remained unchanged from the previous day. In the spot market, discussions for prompt September-loading oxy-grade cargoes continued. Sinochem reportedly offered an MR-size cargo of 92RON gasoline for September loading in Quanzhou, and PetroChina was heard to be continuing its sales. On the demand side, Indonesia state-owned Pertamina issued a buy tender for 90RON gasoline for September delivery. The total volume targeted was 1.3 mil barrels.

　 With firm gasoline markets in Europe and the US, there was an increasing likelihood that finished products and blending stocks produced in Northeast Asia and India would be sold to other regions.

Naphtha: Market slightly rebounds on worsening ME situation and eased ample supply

　 The differential for open-spec naphtha (OSN) for H2 Oct delivery in Japan rebounded slightly. It was expected that supply of crude oil and naphtha would get tight, which supported the market in the wake of the worsening situation in the Middle East. So far, no reports of supply disruptions had been heard, but a sense of caution appeared to prevail among market participants. It was also pointed out that the temporary demand declined due to troubles at naphtha crackers in Japan during August and a sense of oversupply of cargoes might have been resolved.

　 LG Chem purchased 25,000mt of open-spec for H2 Oct delivery in a tender closed on Sep 1 to H2 Sep quotations. According to market sources, cargoes for delivery in Yeosu were reportedly at a premium of $16.00/mt, and for delivery in Daesan were at a premium of $18.00/mt. The freight differential from the Middle East to Yeosu and Chiba was reportedly at least $4.00/mt higher for Chiba.

　 Regarding facilities, South Korean Lotte Chemical halted operations of one naphtha cracker (with an ethylene production capacity of 1.1 million mt/year) it owns in Daesan on Oct 2. As previously reported, Hyundai Chemical and Lotte Chemical launched H&L Advanced effective Oct 1, integrating the naphtha crackers and petrochemical facilities they each owned in Daesan. The naphtha cracker owned by Hyundai Chemical (with an ethylene production capacity of 0.85 million mt/year) will continue operations, responsible for supplying olefins to derivative facilities. This marks the first phase of petrochemical industry restructuring in South Korea.

Middle distillates: Early Oct 10ppm GO from Korea traded at +$3

　 The differential for MR-size cargoes of jet fuel on an FOB Northeast Asia basis softened, with increased prompt cargoes from China and rising freight rates adding downward pressures.

　 In the Singapore paper market, regrade representing the price differential between jet fuel and gasoil remained deeply negative, reaching more than $5.00/bbl negative as of Sep 2. While the gasoil market remained firm, jet fuel demand in the region was limited, and ample supply from China eased fundamentals.

　 Chinese players had largely finalized their September export volumes, and numerous sales for H1 September cargoes were being offered via private negotiations.

　 The differential for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis firmed. Buying interest for early October loading cargoes emerged, pushing up the market. It was also pointed out that the arbitrage windows to Europe and South America remained open.

　 In the spot market, an MR-size cargo for early October loading on an FOB South Korea basis was traded at a premium of $3.00/bbl to Singapore quotations.

Fuel oil: Wait-and-see mood persists as crude oil market unstable

　 The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis remained unchanged. Amid continued volatility in crude oil and petroleum product markets, market players strengthened a wait-and-see stance. On Sep 2, bunker prices in Asia also surged. Both in South Korea and Singapore, for VLSFO bunker, a premium to Singapore quotations was well over $100.00/mt. However, while bunker demand in Asia lacked momentum, the tightness in supply was also easing.

　 In the Singapore market, new blending feedstocks, which had been in short supply recently, were reportedly arriving. Bunker fuel supply was expected to see an easing of tightness going forward.