Gasoline: China Sep exports expected to exceed 600,000mt

　 The differentials for MR-size gasoline cargoes on an FOB Northeast Asia basis were unchanged. The US gasoline market continued to extend gains, and inquiries for the US market were likely to continue, which supported the Asian gasoline market. Additionally, demand for Indonesia was expected to continue.

　 On the supply side, volumes of Chinese cargoes for September loading were likely to be lower than initially expected. According to market sources, September volumes were likely to be in the range of 600,000-650,000mt. Initially, there had been expectations that volumes could increase to around 800,000mt. The outlook for lower-than-expected prompt-month volumes was reportedly leading to a sense of tight supply for October loading, and the October/November monthly spread in the Singapore paper market was in backwardation of around $7.20/bbl.

　 Indonesia state-owned Pertamina conducted a term tender for October-December delivery that closed on Sep 7. The tender covered 90RON and 92RON, with monthly volumes of 9.1 mil bbl. The startup of the residue fluid catalytic cracker (RFCC) at its Balikpapan refinery was reportedly postponed to July 2027.

Naphtha: Heavy prices up by decreasing arb cargoes

　 The differentials for the second-half (H2) Oct open-spec naphtha (OSN) delivery to Japan gained. Looking ahead, South Korean and Chinese petrochemical producers were planning maintenance activities for naphtha crackers, and it was pointed out that a sense of tight supply for ethylene and propylene could temporarily strengthen in the region. As a result, some petrochemical producers indicated expectations that operating crackers would raise their operating rates to cover olefin output shortfalls. However, no crackers that decided to increase operating rates have been heard of at this moment. Meanwhile, there was also information that ethane exports from the US to China were increasing, and it was pointed out that this could curb naphtha import growth.

　 The differentials for H2 Oct heavy naphtha delivery to Japan were firm. A sense of tight supply pushed up the market. In supplier regions like the US and Europe, export availability for heavy naphtha was declining, leading to reduced supply in demand centers in Asia. If cargoes were shipped within Asia, the price for H2 Oct delivery to Japan on a CFR basis was reportedly at a premium of $100/mt or more to Japan quotations.

Middle distillates: Korean companies no interest on kerosene sales for Japan

　 The differentials for MR-size jet fuel on an FOB Northeast Asia basis went down late this week. Strong selling pressure from Chinese players for cargoes loading in September pushed down the market for first half October. Exports from China for September loading, including those for Hong Kong and Macau, were expected to exceed 2.1mil mt. Meanwhile, on the demand side, the arbitrage window to the US West Coast and other regions outside Asia was completely closed, leading to weak inquiries. Reflecting this, the October/November spread in the Singapore paper market formed contango.

　 The differentials for SR-size kerosene on an FOB South Korea basis were unchanged. Talks on cargoes for, a major buyer of the fuel, were limited. Buyers were hesitant to procure, as import margins for Japan were poor. Furthermore, South Korean oil firms as sellers were not aggressive to sell cargoes for Japan, as they could achieve better profits by exporting jet fuel to other regions than Japan. Buying and selling ideas were far apart.

　 According to multiple market sources, Japan's domestic product shipments by refiners in August saw ENEOS at 93-94% year-on-year and Cosmo Oil at 104-105% y/y, while Idemitsu Kosan posted a significant increase at 146-147% y/y. Japanese trading houses curbed purchases of imported products and attempted to increase procurements from Japanese oil firms.

　 The differentials for MR-size 0.001% sulfur gasoil on an FOB Northeast Asia basis declined. High freight rates remained, continuing to weigh on FOB market prices. Regarding China's September export volume, a market source pointed out 1.4 mil to 1.6 mil mt. Encouraged by high crack margins, oil companies increased exports. Exports were expected to remain at high levels from October onwards.

Fuel oil: Sales emerge from Dangote

　 The differentials for MR-size 0.5% sulfur fuel oil on an FOB South Korea basis retreated. Several bearish factors weighed heavily on the market. Spot sales continued both within and outside the region, leading to increased supply in the Singapore market, a trading hub of oil products in Asia. The 650,000b/d Dangote refinery in Nigeria conducted a sell tender that closed on Sep 9, for 70,000mt of low sulfur straight run fuel oil (0.5%S) and 60,000mt of slurry fuel oil for Sep 20-22 loading.

　 Additionally, high freight rates also exerted downward pressure on FOB prices. Freight rates for MR-size vessels between South Korea and Singapore remained high at nearly $30.00/mt.

The substantial backwardation in the paper market also remained a bearish factor. Traders, mindful of risks, were heard to be holding back their bids. The Oct/Nov monthly spread was in backwardation of over $35.00/mt.