Products: Aug 30-Sep 3: 0.5%S fuel oil gains on VLSFO price hike
GASOLINE The differentials for MR-size cargoes of gasoline on an FOB North Asia basis were unchanged as sluggish demand capped the market. Demand of gasoline in Southeast Asia was decreasing, and purchases for spot cargoes were still poor. However, some pointed out that demand in Indonesia would recover as the outbreak of COVID-19 was setting down and restrictions to prevent from the pandemic was gradually being lifted. On the other hand, refiners in Northeast Asia had yet to fix export schedules and no spot sales for cargoes loading in October were reported.
NAPHTHA In the Northeast Asia spot market, a deal for second-half October arrival was confirmed in the positive territory to Japan quotations. Mitsui Chemical seemed to have purchased 25,000mt naphtha with a paraffine content at 65-75% arriving on Oct 20-31 in Osaka at a premium of $2-3/mt to Japan quotations pegged to first-half September pricing through a tender. Last week, the company was also seen to have bought naphtha arriving in first-half October in Osaka at a low single digit discount to a slight premium to the same quotations. In the US, Hurricane "Ida" was striking the Gulf of Mexico and more than 90% of operations at refineries in the region were decreasing. There were views that the arbitrage volumes to Asia would be lower. Thinner supply of oil products including naphtha and ethylene derived from naphtha would likely push up naphtha markets in Asia.
MIDDLE DISTILLATES The differentials for MR-size cargoes of jet fuel on an North Asia basis weakened on retreating demand. As the summer demand season was winding down, inquiries for cargoes for the US seemed to be declining. Although freight rates were slightly softening, they were still at a relatively high level.
FUEL OIL The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis gained as feedstock of VLSFO were rising. South Korean oil companies were considering to sell and to pull up their sales prices for 0.5% sulfur fuel oil in the Asian market which was less competitive than VLSFO in the bunker market. While each company was expected to raise the refinery run rates this month, it was informed that SK Energy actually kept its refinery run rates at its refinery on the average at below 70%. Further, the company and Hyundai Oilbank were considering turnaround for units related to productions of fuel oil from September to October, so that supply of the fuel would not possibly increase even if refinery runs rates would recover.
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