GASOLINE

The differential for MR-size cargoes of 92RON gasoline on an FOB Northeast Asia basis was up on tight supply/demand fundamentals. Spot supply from Northeast Asia was declining due to regular maintenance or production cuts at refineries. Meanwhile, as the spread of COVID-19 was winding down and lockdown of cities were being lifted, gasoline demand was increasing. On Jul 17, Formosa Petrochemicals Co in Taiwan sold two MR-size cargoes of 93RON gasoline loading on Jul 21-25 and Jul 26-30 through a tender at a premium of $1.70/bbl to Singapore quotations on an FOB basis. The buyer of the cargoes was a trader. As the volume was traded with larger vessels, the price seemed to have been higher than that of a usual cargo size. In Japan, a refiner had reportedly procured an MR-size cargo of gasoline to be delivered in Kawasaki at the end of June, which had been loaded in Singapore.

NAPHTHA

Prices of liquified petroleum gas (LPG) had temporarily increased as Formosa Petrochemicals Co (FPCC) in Taiwan bought LPG last weekend, but prices or propane and butane sharply went down after that. An end-user in Northeast Asia said that some buyers would buy LPG instead of naphtha amid lower prices for LPG. That could become a bearish factor for naphtha. In the petrochemical products market, prices for olefin went up to $800's/mt on recovering demand and margins over naphtha also climbed to around $500/mt. Operations of naphtha crackers in the regions were almost full.

MIDDLE DISTILLATES

The differentials for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis rose on tight supply/demand fundamentals. However, the number of spot cargoes loading in July was extremely limited as operation rates at refineries in the regions stayed low. A refiner in South Korea focused on term supply, and it was not clear if it would sell some spot cargoes loading in July. A trader who received term cargoes from refiners seemed to have some spot cargoes for sale, but a market speculated that the trader was not in a hurry to sell them amid strengthening market. Some sellers in the region reportedly perceived selling ideals at a premium of around $1.00/bbl to Singapore quotations on an FOB Japan or FOB South Korea basis, but discussions were not ongoing at the level.

FUEL OIL

The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis was unchanged. However, inquiries for cargoes loading in South Korea were scarce. On the supply side, SK Energy and S-Oil Co lowered operation rates at their refineries due to regular maintenance and supply was thin. However, they were possibly going to raise operation rates as refining margins were improving on the back of stable crude oil prices. If the second wave of COVID-19 would arise, demand would weaken again and market sentiment would get worse. A refiner in South Korea said that prices for July and August cargoes would be unchanged or get slightly lower.

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