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Weekly Summary

Products: Oct 11-15: Jet fuel oil gains on increasing US demand


The differential for MR-size cargoes of gasoline on an FOB Northeast Asia basis was unchanged.

However, supply/demand was tight and market sentiment was strong. In Southeast Asia, lockdowns were lifted and along with a recovery in the economy, gasoline demand was gradually rising. On the other hand, in Northeast Asia, supply tightened as exports from China were reduced. Chinese oil companies were expected to sell cargoes for November loading from now on but export volumes were likely to remain low. As business conditions in the domestic market were good and there was a shortage of export quotas given to oil companies, exports were likely to be curbed. With US gasoline prices rising as well, refining margins for gasoline against Dubai crude increased to mid-$11's.



In the Northeast Asia spot markets, South Korean and Japanese buyers were very interested in buying second-half November delivery cargoes. YNCC seemed to have bought paraffinic naphtha with a paraffine content at 75% at a premium of around $9/mt to Japan quotations. In addition, KPIC was said to have purchased paraffinic grade at a premium of $7-9/mt to the same quotations. Showa Denko was reported to have procured the same paraffinic naphtha with a paraffine content at 75% at a premium of $8-9/mt to the quotations. Further, Hanwha Total seemed to be seeking naphtha. A source in Asia said that the differential for paraffinic naphtha on a CFR Japan basis was slightly down. As a bearish factor, it was cited that ethylene prices in the region were concerned to be weaker, and the crack margin against naphtha was narrowing to mid-$300's/mt.



The FOB Northeast Asia market for MR-size cargoes for jet fuel was strengthen. The market was boosted by increasing demand from the US. The arbitrage from Asia to the US West Coast was gradually opening again. Further, import restrictions in the US would be eased from November and demand for jet fuel was anticipated to rise. Players were apparently building stocks. Traders aimed to procure cargoes for delivery to the US and more buyers were looking for Northeast Asian cargoes. GS Calex sold two MR-size cargoes loading Nov 2-6 and Nov 10-14 respectively via a tender on Oct 8. The price was reported at a premium of around 25cts/bbl to Singapore quotations on an FOB basis. Apart from this, China National Offshore Oil Corporation (CNOOC) was moving to sell an MR-size cargo for November loading but no deals were heard at the moment.



The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis. In South Korea, sales competitions of VLSFO for bunker were overheating. In addition to share fights between S-Oil and SK Energy, Hyundai Oilbank was pulling up the refinery run to almost full level on the back of fine refining margins of middle distillates, so that supply of VLSFO was also increasing. However, recently GS Caltex participated in the spot sales, and Hyundai Oilbank stopped selling spot cargoes tentatively due to a sense of oversupply. On the mirror of these situations, the FOB South Korea prices for 0.5% sulfur fuel oil as feedstock of VLSFO were in weak tones.



Tokyo : Products Team  Satoko Waki   +81-3-3552-2411Copyright © RIM Intelligence Co. ALL RIGHTS RESERVED.