Gasoline: Market softens on high freight rates and declining demand

　 The differentials for MR-size gasoline cargoes on an FOB Northeast Asia basis. High freight rates, in addition to demand for November-loading cargoes largely being met, were putting downward pressure on the market. Additionally, on the supply and demand front, with the resumption of sales of October-loading cargoes from China, hardly any players with short positions were observed, according to a trader.

　 In Southeast Asia, an outlook was heard that two residue fluid catalytic crackers (RFCCs), each with a capacity of 85,000 b/d, at Malaysia's PRefChem refinery with a capacity of 300,000 b/d could resume operations soon. The RFCCs reportedly shut down due to a glitch around Oct 18. In the Singapore market, downward pressure was being exerted on the market for high-RON grades. It was pointed out that octane value might have been capped due to the view that PRefChem's refining units would resume operations early.

Naphtha: Market extends gains on concerns over reduced ME cargoes

　 The differentials for the first-half (H1) Dec open-spec naphtha (OSN) delivery to Japan strengthened. The market had extended gains on tightening supply. The arbitrage window from the West to Asia had closed due to high freight rates. Additionally, a market source pointed out concerns that naphtha supply would tighten going forward, following recent reports of a decrease in the number of tankers passing through the Strait of Hormuz.

　Regarding plant-related news, LG Chem in South Korea shut down the No.1 naphtha cracker with an annual ethylene production capacity of 1.18 mil mt at its Yeosu plant by Friday for turnaround. The turnaround is scheduled to last until Dec 11. After the naphtha cracker restarts, LG Chem was expected to shut down the currently operating No.2 naphtha cracker with an annual ethylene production capacity of 900,000mt again for production adjustment.

Middle distillates: Gasoil market weakens on strong selling interest from Korea

　 The differential for MR-size jet fuel cargoes loading in Northeast Asia went down. Although supply from Northeast Asian players remained ample, demand was largely met, leading to weak buying interest. In South Korea, Hyundai Oilbank sold two cargoes loading in late November via a tender. S-Oil also sold an MR-size cargo for Nov 22-26 loading in a tender. GS Caltex issued a sell tender for 300,000bbl or 450,000bbl for Nov 8-12 loading, but this tender was withdrawn.

　 The differential for SR-size kerosene cargoes on an FOB South Korea basis went up. Lower spot availability of South Korean sellers pushed down the market. As the Japanese government's decision to provide a subsidy for kerosene pricing had been made, trading houses and refiners in the country were actively exploring the sales surplus of November-loading cargoes from South Korean oil companies. Several South Korean oil companies, however, had sold MR-size cargoes of jet fuel or kerosene for November-loading. In addition, they had concluded term contracts with two major Japanese refiners, and term negotiations with another major refiner were nearing completion. Consequently, sales surplus of South Korean sellers was limited, and prices were trending upwards.

　 The differentials for MR-size 0.001% sulfur gasoil on an FOB Northeast Asia basis went down.

Sales for November-loading cargoes from South Korea were heard. S-Oil Co in the country closed a sell tender for three MR-size cargoes of 0.001% sulfur gasoil for November loading. Another oil firm was reportedly moving to sell 150,000bbl of 0.001% sulfur gasoil for November loading. GS Caltex also issued a sell tender for 300,000bbl of 0.005% sulfur gasoil or 0.05% sulfur gasoil loading on Nov 21-25.

　 President Lee Jae-myung said on Wednesday that preparations were underway to reduce domestic supply obligations and expand exports. Currently, the South Korean government sets a cap for four oil firms, limiting the monthly export volume of gasoline, kerosene, and gasoil to 100% of the previous year's monthly volume. However, domestically, gasoil demand is weak. Additionally, due to the government imposing controlled prices domestically, domestic prices are kept lower than international quotations. Oil firms and traders commented that if South Korea's exports expanded, the market would be significantly pushed down. However, at present, no specific dates or details had been provided.

Fuel oil: Buying interest increasing from China

　 The differentials for MR-size 3.5% sulfur fuel oil (380cst) on an FOB South Korea basis unchanged . Although supply/demand fundamentals were tight, high freight rates continued to weigh on the market. Exports of high sulfur fuel oil from the Middle East and Russia were declining due to geopolitical risks. Meanwhile, in China, buying interest for high sulfur fuel oil for bunker use was strengthening since September on the back of thinning domestic supply. As the bunker market in China remained firm, it appeared that import economics were workable even with the current high freight rates.

　In the spot market, FPCC in Taiwan sold 40,000mt of 3.5% sulfur fuel oil (180cst) loading on Nov 22-26 via a tender closed on last Tuesday.