GASOLINE

The differential for MR-size cargoes of 92RON gasoline on an FOB North Asia basis went up. Lower freight rates and declining supply from China became bullish factors for the market. As reported, refiners in China were reluctant to export gasoline in July due to stable sales margins at home and shortage of export quota of oil products. Meanwhile, refiners in Japan made decisions to import gasoline due to refineries' troubles at home. In addition to cargoes from South Korea, a few from China seemed to have been procured.

NAPHTHA

In the Northeast Asia spot markets, a Taiwanese end-user was interested in buying. Formosa Petrochemicals Co (FPCC) closed a tender to buy naphtha for first-half August delivery on Thursday with unrevealed results so far. In the next week, South Korean buyers would likely move for procurement. A Northeast Asian market viewer mentioned that the differential for open-spec naphtha on a CFR Japan basis was conducting at a mid-single digit premium to Japan quotations.

In Addition, continuously Japanese end-users were considering to buy for August delivery. Mitsui Chemical was expected to conduct a tender to buy naphtha for first-half August delivery in China in late this week. Showa Denko seemed to be planning to procure for second-half August delivery.

In terms of naphtha crackers, GS Caltex in South Korea seemed to take about a month for operating the increased unit fully. Also, the operation of same kind of unit owned by LG Chem was insecure. Further, Lotte Chemical was pulling up run rates for the unit after turnaround. However, increases in demand along with rising up runs were already discounted, and it would be a bearish factor for prices of naphtha as the feedstock of ethylene in case of weakening ethylene markets further due to ample supply after going up run rates.

MIDDLE DISTILLATES

The differential for MR-size cargoes of 0.001% sulfur gasoil on North Asia basis weakened. Talks on cargoes loading in July were coming close to an end, and some deals with cheap prices were heard in the market as sellers intended to digest sales volumes in the month. In Japan, ENEOS reportedly sold a cargo loading at the end of July. Its buyer seemed to be Ampol. The refiner was initially scheduled to sell at least three to four MR-size cargoes in July, but it was possible that it would finish spot sales in the month due to some refineries' troubles including its Marifu refinery.

FUEL OIL

The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis was unchanged. A South Korean oil company noted that the differentials of VLSFO for bunker and 0.5% sulfur fuel oil on an FOB South Korea basis were both keeping lowly at a discount of around $20.00/mt to Singapore quotations. As a bearish factor, the tax policy for light cycle oil (LCO) to China was enhancing oversupply of gasoil, VLSFO, and 0.5% sulfur fuel oil as the feedstock instead. In Taiwan, the residue desulfurization unit (RDS) of Formosa Petrochemical Co (FPCC) still has been shut down until end June through early July, so that they were refraining from issuance of tenders for July loading so far.