GASOLINE

The differential for MR-size cargoes of 92RON gasoline on an FOB Northeast Asia basis was unchanged. However, sluggish demand in Southeast Asia capped the market. As COVID-19 was spreading out in Southeast Asia, demand of gasoline was declining. No spot purchases were seen from Vietnam or Indonesia. Meanwhile, Indonesia's state-owned Pertamina had issued term buy tenders one after another. The company newly issued a tender for 92RON gasoline to be delivered from July to December. It would take at least one 500,000bbl cargo per month. The tender was scheduled to close on May 25 with its price validity date set on May 30.

NAPHTHA

The differential for LR-size cargoes of naphtha on an FOB Middle East basis gained. The quarter term starting from July conducted by Qatar Petroleum (QP) was informed to have concluded at a premium of $26/mt to Middle East quotations for heavy full range naphtha. Further, discussions for the term contract starting from August conducted by Kuwait Petroleum Corporation (KPC) was estimated to start next week. In the meantime, a source related with the Middle East markets reported that spot prices for naphtha loading from the Middle East was conducting at a premium of $18.00-20.00/mt to the quotations for open-spec grade as paraffine content at 65%.

In Japan, refinery run rates on the average were lower than 60%. In addition to shutdowns for five crude distillation units (CDU) of ENEOS due to trouble and turnaround, Idemitsu, Fuji Oil, and Showa Yokkaichi were also in turnaround for its refineries. However, a Japanese end-user noted that productions were significantly down, but tightness in supply and demand could not be felt for naphtha markets. At the same time, Asahi Kasei Mitsubishi Chemical Ethylene Corporation has been in regular maintenance of its 567,000mt naphtha cracker at Mizushima plant until mid-July, and Mitsui Chemical was planning for turnaround of 612,000mt naphtha cracker at Chiba plant from mid-June through early August. Those declines in demand seemed to capping naphtha prices.

MIDDLE DISTILLATES

The differential for MR-size cargoes of jet fuel on an FOB South Korea basis went up. Purchases were intensive for cargoes loading at the end of the month amid the contango market structure. On the other hand, demand in Asia remained weak amid the pandemic of COVID-19. The arbitrage window for cargoes to flow into the US West Coast from Asia was on and off. Therefore, no procurements of cargoes for the US were reported.

The differential for MR-size cargoes of 0.25% sulfur gasoil on an FOB South Korea basis weakened. In line with declining demand of light cycle oil (LCO) in China, prices for 0.25% sulfur gasoil and 0.5% sulfur gasoil were softening as with the case with those for 0.05% sulfur gasoil. As refiners were willing to produce more gasoil amid increasing gasoil crack margins, prices for gasoil were said to be softening.

FUEL OIL

The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis went up　 from thin supply. South Korean oil companies were raising up yields for gasoline and middle distillates whose refining margins are fine, and were declining productions of fuel oil whose profitability lowered instead. One South Korean oil company informed that premiums of VLSFO for bunker were gradually up, and productions of 0.5% sulfur fuel oil as the feedstock at South Korean refineries would decrease in end May through June.

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