Products: Sep 27-Oct 1:0.3%S fuel oil price stays firm on increasing demand as alternative of LNG
The differential for MR-size cargoes of 92RON gasoline on an FOB Northeast Asia basis was unchanged. Refiners in Northeast Asia had yet to fix exports schedules in November, and were not likely to be making moves to sell November loadings. However, exports from China were still expected to be few, and it was pointed out that supply in the region would remain thin. As reported, export quotas of oil companies in China were limited, so that they were inactive to export cargoes. On the other hand, demand in Southeast Asia was increasing, but no new purchases from Indonesia or Vietnam were reported to date. Although COVID-19 cases in Vietnam were declining, spot purchases had not been seen for a while.
The differential for LR-size cargoes of naphtha on an FOB Middle East basis gained on thin supply from the Middle East. A market participant viewed that the differential for LR-size cargoes of naphtha on an FOB Middle East basis was at a premium in the range of $18.00-20.00/mt to Middle East quotations. As reported, Kuwait Petroleum Corporation (KPC) was going to start discussions on term contracts starting from December. The discussions were actually scheduled to be from the week after next. Further, prices for cargoes to be delivered in Northeast Asia stayed firm, that was one of the bullish factors. In Northeast Asia, the outbreak of COVID-19 was setting down in some countries and areas, and some end-users seemed to be increasing procurements of cargoes to be delivered in November or later. Prices of open-spec naphtha cargoes stayed high especially those for prompt delivery ones.
The differential for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis was weakened on some active sales of cargoes loading at the end of October to digest volumes. In addition, the backwardation structure in the Singapore paper swaps market was also a factor for the lower offer levels. A Middle East-based trader sold an Oct 27-29 loading cargo from South Korea at a discount of 45cts/bbl to Singapore quotation on an FOB basis. The trader was said to have at least two more cargoes for sale loading on Oct 23-27 and 27-31, but had not sold them. Also, In Japan, a major oil company was selling a cargo at a discount of 30cts/bbl to the Singapore quotations, but this cargo had not been sold either. Most of the market players had already shifted their interests to November loadings, so they were not active to buy October loadings.
The differential for MR-size cargoes of 0.3% sulfur fuel oil on an FOB South Korea basis was unchanged. However, procurements of fuel oil as the alternative of liquefied natural gas (LNG), whose prices had been in surge, were increasing in Japan. Therefore, market sentiment of 0.3% sulfur fuel oil also stayed firm. SK Energy in South Korea sold one cargo of low sulfur fuel oil to Tohoku Power Co in Japan recently with unknown prices for now. Further, a Japanese trading firm, Mitsubishi Corp seemed to have been importing high sulfur fuel oil for Chugoku Power Co. The trading firm was said to have been moving to purchase low sulfur fuel oil for Kansai Power Co as well. On the other hand, a trader in South Korea reported that the main fuel for power generations in the country had already been transferring to LNG, so that it was unsure whether demand of low sulfur fuel oil would extend or not in the country this winter yet.