Gasoline: Prices for non-oxy grade increasing

The differential for MR-size cargos of 91RON gasoline on an FOB South Korea basis and the differential for 93RON gasoline on an FOB Taiwan basis went up on week. Some purchases for short-covering were observed after some refineries' troubles surfaced from Southeast Asia. On Tuesday, in Taiwan, Formosa Petrochemicals Co (FPCC) sold 500,000bbl of 93RON gasoline loading in mid-February through a tender. The price was reportedly at a premium of around $3.00/bbl to the quotations in terms of an MR-size cargo basis.

In the meantime, demand in Southeast Asia was expected to increase. As the Islamic fasting month Ramadan would start from the middle of March, some Muslim countries such as Indonesia were possibly going to import more volumes in February.

Naphtha: Fundamentals expected to slacken going forward

Open-spec naphtha prices on a CFR Japan basis were at a premium of $20.50-21.50/mt to Japan quotations to be assessed 30 days before delivery. An expectation extended that supply/demand fundamentals would slacken going forward. Regular maintenance at refineries in the Middle East was expected to finish by March, so that the capacity of supply from the region would recover. On the other hand, considering narrow profits of olefins refining margins, several companies continued to decrease the operation rates of naphtha crackers to adjust the production volume. Thus, demand for naphtha would be capped.

In Japan, two naphtha crackers were scheduled to have maintenance activities from March. Another cracker planned to decrease the operation rates in the month because derivative facilities planned to have turnaround. In Taiwan, CPC Co shut down operations at its No.3 cracker from Jan 15 to Mar 6 due to turnaround.

Middle distillates: A risk of the Red Sea route and high freights concerned in GO markets

The differentials for MR-size cargoes of jet fuel on an FOB Northeast Asia basis declined on slack supply/demand fundamentals. South Korean refiners moved on sales via tenders. However, there was no more procurement from Japanese companies, main buyers of South Korean cargoes. It was heard that not so many bids were shown for the tenders as buying interest was retreating in the market. Increasing sales from China were another bearish factor. The sales volume in January was expected to be around 1.6 mil mt. In the meantime, it remained unprofitable to transport cargoes to the U.S. because the market prices on an FOB Northeast Asia basis were hovering in the premium level.

The differential for LR-size cargoes of jet fuel on an FOB Middle East basis was at a premium in the range of $4.65-4.85/bbl to Middle East quotations. Some were concerned about supply disruptions to Europe. As the geopolitical risk off the coast of the Red Sea continued, transportations of cargoes from the Middle East or India were forecast to be delayed or even canceled to West.

The differentials for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis went down. Some traders pointed out that supply/demand fundamentals were slackening in Asia. Prolonged geopolitical risks off the Red Sea along with high freight rates caused poor sales from Asia to Europe. Another bearish factor was expectations of increasing sales of February loading cargoes from China. The country would export at least around 1 mill mt in January, and it was pointed out that sales volumes for February loading cargoes would remain at the same level as January as demand from factories would decline in China due to the Lunar New Year holidays.

In Japan, ENEOS and Idemitsu Kosan were moving to sell cargoes loading in February. According to several sources, ENEOS sold one MR-size cargo for Feb 6-10 loading this week at a discount of about 20cts/bbl to Singapore quotations, while Idemitsu Kosan also sold MR-size cargo for mid-February loading at a discount of 40cts/bbl to the quotation by last week.

Fuel oil: Japan's trading house eager to deal spot HSFO

The differential for MR-size cargoes of 3.5% sulfur fuel oil (380cst) on an FOB Japan basis was unchanged. A Japanese trading house was reportedly moving to sell a near-SR size cargo high sulfur fuel oil (HSFO) for loading in early February to buyers including South Korean oil companies and so on, a market source said. Its offers, however, did not come up to the market surface so far. After a refinery in Japan suffered from failures at its desulfurization unit, surplus HSFO cargoes appeared to be hastily shifted to overseas markets, a player viewed. In addition, "If the unit troubles linger for a while, more surplus cargoes are expected to be sold from Japan," foresaw a person familiar with the situation.

Maritime Port Authority Singapore (MPA) announced that the estimated marine fuel oil sales volume in December in the country was at 5.05 mil mt, sharply up 832,820mt (19.7%) on year and up 785,150mt (18.4%) on month.