Products: May 17-21:0.05%S Gasoil in downward pressures amid China impose tax to LCO
The differential for MR-size cargoes of 92RON gasoline on an FOB Northeast Asia basis was unchanged. Exports for cargoes loading in June were expected to decline from China. In the country, economic activities were recovering as the vaccinations for COVID-19 were advancing. Therefore, demand of gasoline in the country was increasing. Refiners in China were said to lower their exports loading in June. Meanwhile, in South Korea, a power outage occurred at S-Oil's Onsan refinery on May 11 and a residue fluid catalytic cracker (RFCC) was likely to have been shut down. However, it was said to restart the next day. In the Philippines, Petron was planning to restart an RFCC in June.
In the Northeast Asia spot markets, Japanese end-users were planning to buy cargoes for July delivery. Mitsui Chemical was considering to issue a tender to buy naphtha arriving in Osaka in second-half July. Showa Denko was also scheduling to procure for second-half July delivery. Further, Maruzen Petrochemical was going to purchase open-spec naphtha for the first half of July delivery. On the other hand, it was in a holiday in South Korea, and concrete spot trades were lackluster.
Owing to the recovery of operations for Colonial Pipeline in the US, supply from Europe to the US declined, while the arbitrage volume to Asia for June was estimated to be up to 1.9 million (mil) mt compared to the previous expectation for 1.5-1.6 mil mt.
The differential for MR-size cargoes of 0.05% sulfur gasoil on an FOB South Korea basis was unchanged. Downward pressures on the market were strengthening amid sluggish demand. As the outbreak of COVID-19 continued, demand in Southeast Asia stayed poor, and traders were unwilling to buy cargoes. In addition, exports to other regions such as Africa were also inactive. On the supply side, one refiner in South Korea was talking on an MR-size cargo loading in June, but had a hard time finding a buyer. Some of traders also seemed to keep selling cargoes loading from Northeast Asia at the end of June. For light cycle oil (LCO), several buyers in China were making moves to cancel orders of cargoes to be loaded in June from South Korea. Therefore, some refiners in South Korea were said to be switching their production of LCO which would be canceled to gasoil or LSMGO.
The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis was unchanged. In South Korea, demands of VLSFO and 0.5% sulfur fuel oil as the feedstock were weak, while supply situations for oil companies in the country did not change, and the prices on an FOB Korea basis were more under downward pressure due to worsening fundamentals as a result. S-Oil was keeping high operations at its refinery because they have been coping with crude oil supplying from the stockholder, Saudi Aramco as usual. Instead, demand was lackluster at the same time, so exports of 0.5% sulfur fuel oil from the company were not confirmed. Further, GS Caltex and Hyundai Oilbank were operating its refineries highly owing to recovery of refining margins for gasoline and middle distillate. Along this, productions of fuel oil as a by-product were abundant. On the other hand, SK Energy was running its refinery lowly, but the supplies of volumes and prices were sustaining at some levels.