Gasoline: Prices for oxy grade decrease on rising freight rates

The differential for MR-size cargos of 92RON gasoline on an FOB South Korea and the differential of 92RON gasoline on an FOB China basis declined. The geopolitical risk in the Red Sea was sending freight rates higher and that was becoming downward pressures on an FOB basis market. In addition, the timing spread between Feb/Mar contract in the Singapore paper swaps market, backwardation was widening to around $1.80/bbl. Thus, traders were reluctant to trade late February cargoes to avoid risks of the monthly spread. This week, a refiner in South Korea moved on an additional sale of a cargo loading in February, but was still having a hard time to sell it. Traders seemed to be reluctant to buy cargoes while freight rates were shooting as chartering vessels was getting hard. It was said that tradable prices for MR-size-cargoes of 92RON gasoline from South Korea loading in late February were at a discount of around $3.00/bbl to the quotations on an FOB basis. This week, in China, PetroChina proved to have sold 60,000mt of 92RON gasoline from its subsidiary West Pacific Petroleum Co Dalian (WEPEC) at a premium in the high $5's/bbl to the quotations on a CFR Singapore basis.

Naphtha: Markets steady due to a concern about the geopolitical risks

Open-spec naphtha prices on a CFR Japan basis were at a premium of $26.00-27.00/mt to Japan quotations to be assessed 30 days before delivery and at a premium of $17.00-18.00/mt to Japan quotations to be assessed 45 days before delivery. The market prices were steady as the geopolitical risks were still concerned. According to a source, a fire occurred at oil products export terminals in West Russia after it had been attacked and some operations suspended. It was probable that export volumes from the country would decrease. Public safety in the Red Sea did not improve. Suppliers would probably decrease sales in case of a delay of the delivery. Arbitrage cargoes from Europe to Northeast Asia were not smoothly flowing. A view was shown that supply/demand fundamentals would remain tight until turnaround at refineries in Qatar and UAE finished.

Middle distillates: JPN and Australia finish short covering for jet fuel

The differentials for MR-size cargoes of jet fuel on an FOB Northeast Asia sharply declined. Buying interest for Northeast Asia loading cargoes had been winding down. Short covering by Japanese and Australian buyers in February were likely to be mostly over. In addition, a hike in freight rates over the past few days had put downward pressures on FOB basis trading.

South Korea's petrochemical firm LG Chem and Italy's company Enilive, a subsidiary of ENI, signed a joint-venture contract for construction of a new bio-refinery in Daesan, South Korea. The two companies had started considering the project since last September. Signing the contract this time is the step forward for the project.

According to the announcement by them, they will construct a new bio-refinery by 2026 at a petrochemical complex of LG in Daesan by taking advantage of ENI's technology for biofuels. The new plant will refine around 400,000mt per year and will produce several biofuels including sustainable aviation fuel (SAF). The final decision of the project is expected to be made within this year.

The differential for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Asia basis softened on rising freight rates in addition to sluggish supply/demand fundamentals. In addition to active sales from SK Energy, Chinese refiners also moved on sales for oil products including gasoil. In the meantime, it spurred the rise of freight rates that a lot of vessels passed through the Cape of Good Hope with deterioration of public orders in the Red Sea.

Fuel oil: Growing supply seen in the Asia FO market

The differential for MR-size cargoes of 3.5% sulfur fuel oil (380cst) on an FOB South Korea basis was staying in the range equivalent to Jan 19. The underlying market tone, however, was weak, reflecting more players expecting supply to increase in Asia. Abu Dhabi National Oil Co (ADNOC) in the United Arab Emirates (UAE) purportedly dealt upward of 150,000 /mt of straight-run fuel oil for loading in January from its 817,000 barrels-per-day Ruwais refinery complex. ADNOC shut down the residue fluid catalytic cracker (RFCC) unit at the refinery for regular maintenance. The RFCC has a capacity of 127,000 barrels-per-day. As a result, ADNOC was apparently accelerating exports of surpluses.

On Jan 23, Taiwan's Formosa Petrochemical Corp (FPCC) sold 40,000/mt of 1.5%S fuel oil for loading in the period of Feb 16 through 18. The price differential appeared to be settled at a discount in the range of $85-90/mt to Singapore quotations (0.5%S).