Gasoline: Prices surge on several bullish factors

The differential for MR-size cargos of 92RON gasoline on an FOB Northeast Asia basis increased. Supply was expected to get tight. Spot sales for cargoes loading in October from China became active. However, domestic demand in the country was possibly going to increase for a week-long National Foundation Day holiday, and exports in the month were forecast to stay low. In South Korea, most refiners made up their mind to skip spot sales in the month due to poor gasoline refining margins in addition to an anticipation that the government would lift the tax cut policy on refined products at the end of October, as earlier reported.

With regard to refineries units, troubles of residue fluid catalytic crackers were taking place one after another at refineries in Taiwan. Formosa Petrochemicals Co shut down the 76,000b/d RFCC at its 540,000b/d Mailiao refinery this week, but was planning to resumed it in mid-October. CPC Co had shut down the 80,000b/d RFCC at its 350,000b/d Talin refinery in late July and postponed the restart scheduled to Oct 3.

Naphtha: Cargoes for delivery in Korea traded at discount

The first half November open-spec naphtha prices on a CFR Japan basis declined due to loose supply/demand fundamentals. The demand season for gasoline passed and the consumption volume of naphtha as a gasoline raw material retreated. The arbitrage cargoes of heavy grade naphtha were floating into Asia from the US and cargoes of full range naphtha, which had been used to produce gasoline, would be likely floating into spot markets in Asia. In addition, light grade naphtha became surplus.

One South Korean petrochemical company bought naphtha for delivery in the first and the second half November at a discount of 50cts/mt to the quotations on a CFR basis.

GS Caltex in South Korea started turnaround of the 700,000mt-per-year ethylene plant on Sep 25. The maintenance activities will continue until Nov 29. The refiner is planning to expand its capacity to 900,000mt-per-year through this maintenance.

In Taiwan, Formosa Petrochemical Corp (FPCC) resumed its 700,000mt-per-year No.1 ethylene unit on Sep 26. The unit had shut down operations from May 22. FPCC was running its 1.2mil mt-per-year No.3 ethylene unit at present.

Middle distillates: 0.05%S market rises on strong Southeast Asian buying

The differential for MR-size cargoes of jet fuel on an FOB Northeast Asia basis went down. Sales volumes from China were expected to increase and it weighed on the market prices. In China, the third batches of export quotas had been released last week. A market source mentioned that sales for cargoes loading in the country were expected to increase.

A Japan's trading house Itochu Co will start supplying sustainable aviation fuel (SAF) to airplanes at Narita International Airport with a Finland-based Neste and a South Korean oil company GS Caltex. The fuel they will supply meets CORSIA criteria. Itochu imported SAF to Fuji Oil's Sodegaura refinery that was produced at refineries in Finland and Singapore operated by Neste, and transported necessary volumes to airports in Japan with coastal vessels. Under the new supply chain, they will mix neat SAF that is produced at Neste's Singapore refinery and bring it to GS Caltex's Yeosu refinery in South Korea. After that, the volume will be brough into a facility at Narita Airport and will be supplied to airplanes.

The differential for MR-size cargoes of 0.05% sulfur gasoil on an FOB Northeast Asia basis strengthened. Southeast Asian refiners showed strong buying interest, and the market strengthened. In South Korea, GS Caltex sold one MR-size cargo of 0.05% sulfur gasoil for Oct 26-30 loading through a tender closed on Thursday. The price was at a discount of $1.70-1.80/bbl to the Singapore 0.001% sulfur quotations on an FOB basis. The buyer was not clear. There were no other 0.05% sulfur gasoil offers from South Korea. Taiwanese refiners were also suspending sales of gasoil due to unit glitches and turnaround of their refineries.

With only few cargoes for sale witnessed in the market, strong inquiries emerged from Southeast Asia. Indonesia's state-owned Pertamina was buying 0.25% sulfur gasoil for end-September to early-October delivery. The company was also showing buying interest in 0.005% sulfur gasoil for late-October delivery. According to market sources, the company had a trouble at the secondary unit at its the 360,000 barrels per day Balikpapan refinery. Also on Sep 26, Vietnam's Petrolimex closed a buy tender for 35,000mt of 0.001% sulfur gasoil for Oct 6-16 delivery and 11,000mt for Oct 11-20 delivery with its price validity date set on Monday.

Fuel oil: Demand from China expected to decrease

The differential for MR-size cargoes of 0.5% sulfur fuel oil on an FOB South Korea basis extended gain two weeks in a raw. However, market sentiment seemed to be turning into a downward trend on expectations that supply would increase in Asia.

A market source mentioned that imports of fuel oil in China could sharply go down in October onward. As reported before, the government was possibly going to abolish or shrink the tax refund for imported fuel oil, and independent refineries in particular could slash their imports of the fuel. If so, fuel oil cargoes that would lose their buyers could flow into the Asia market.