Gasoline: Price movements of non-oxy grade fluctuate

Price movements of non-oxy specs were volatile this week. The differential for MR-size cargos of 93RON gasoline on an FOB Taiwan basis and the differential of 92RON gasoline on an FOB China basis went up late last week. A sense of oversupply was being eased as inflows from regions outside Asia were declining. Procurements of cargoes from the Middle East and India were declining that had been abundant some time ago. In addition, falling freight rates of MR-size cargoes also supported the market.

On the other hand, there was a bearish factor on the demand side. The import volume was decreasing in Australia, a main outlet for non-oxy grade from Northeast Asia because the off gasoline demand season was starting in the country.

Naphtha: Cracker operations expected to fall on narrower ethylene margins over naphtha

Open-spec naphtha prices on a CFR Japan basis were at a premium of $20.00-21.00/mt to Japan quotations to be assessed 30 days before deliver.

Fresh movements for the first half of May arrivals had not been in a full swing. Market participants pointed out that Japanese petrochemical companies might curb procurements of naphtha in the spot market. Currently, profitability at refineries, especially for middle distillates, was stable. In addition, the operations of crude distillation units (CDU) were expected to stay high toward spring as Japanese refiners were building up the inventories for scheduled maintenance. Under these circumstances, naphtha supply through pipelines was likely to be abundant. However, the narrower price gap between naphtha and ethylene made it difficult for petrochemical companies to raise operation rates of their crackers. Therefore, it was anticipated that it was not necessary for them to purchase naphtha in the spot market.

In South Korea, KPIC was reportedly considering to lower the operation rates of its cracker due to the narrower price gap between naphtha and ethylene.

Middle distillates: 0.001%S GO falls as Korea refiners have strong selling interest

The differentials for MR-size cargoes of jet fuel on an FOB Northeast Asia softened. Weaker demand for other regions pushed down the prices.

This week, two MR-size cargoes loading in South Korea in late April were traded at a discount of 90cts/bbl to Singapore quotations on an FOB basis. Procurements for Australia were going to finish. In addition, the arbitrage windows for Europe and the U.S. remained narrow. Thus, the market prices were pushed down.

The differential for MR-size cargoes of 0.001% sulfur gasoil on an FOB Northeast Aisa went down late last week. Markets believed that supply/demand fundamentals would turn to loosen again.

In the spot markets, one MR-size cargo loading in mid-April was traded at a discount of $1.80-1.90/bbl to Singapore quotations on an FOB basis and one MR-size cargo loading in late April was also traded at a discount of $2.10/bbl to the quotations on an FOB basis.

South Korean refiners actively moved on sales as the government policy to cut tax for oil products including gasoil would likely continue in May onward in the country. The policy was scheduled to be lifted at the end of April. Reflecting it, a view was shown that refiners would have less need to increase domestic inventories.

Meanwhile, demand for Europe was expected to decrease. According to a source, it seemed to be one of the reasons that the Russian government mentioned that it would delay turnaround at refineries and maintain supply volume. In the U.S., stock level was rising. The source pointed out that a sense of loose supply/demand fundamentals globally surfaced.

Fuel oil: 3.5% sulfur discounts deepen on oversupply in Asia

The differential for MR-size cargoes of 3.5% sulfur fuel oil (380cst) on an FOB South Korea basis went down on oversupply. In the market, discussion levels on cargoes loading from South Korea were said to dip to a discount of around $30/mt to the quotations on an FOB basis. Demand in China, one of the main outlets for cargoes from South Korea, stay sluggish, and they were losing their destinations. Some South Korean refiners were focusing on supply to domestic bunker market. In addition, inflows from the Middle East to Asia were also increasing, and a sense of oversupply was unlikely to be eased soon.