- 00 ppm defies bearish sentiment in benchmark gasoil grade
- Tight supplies from South Korea prop up medium sulfur gasoil
A recent news article published in the Platts states that Asian medium sulfur gasoil resilient amid tighter supplies.
Asian medium sulfur gasoil grade
Amid expectations of tightened supplies, the Asian medium sulfur gasoil grade is defying the bearish sentiment plaguing the benchmark ultra-low sulfur gasoil, sources said.
The Platts FOB Singapore 500 ppm sulfur gasoil cash differential against the Mean of Platts Singapore gasoil assessment has been on a steady incline since Sept. 12, and was last assessed at an almost three-month high of minus $2.11/b at 0830 GMT Asian close on Sept. 19, S&P Global Commodity Insights’ data showed.
The cash differential was last assessed higher at minus $2.07/b on June 24, the data showed.
The Asian medium sulfur gasoil grade is demonstrating resilience in its stable upward trajectory, against a backdrop of volatility and bearishness in the benchmark 10 ppm sulfur gasoil grade, according to sources.
Uncertainty continues to dominate the benchmark gasoil grade as market participants keenly seek confirmation on the volumes that will be released in China’s fourth batch of oil product export quotas.
Market discussions for the quotas began at 1.5 million mt for the rest of 2022, but estimates quickly climbed to 10-15 million mt over the last week, leading to a rapid easing in ultra-low sulfur gasoil market in Asia.
“Parties are finding the direction, and the uncertainty of China export volume is a big issue,” said a regional gasoil trader.
Medium sulfur gasoil grade
However, the medium sulfur gasoil grade has continued to climb, as expectations of tightening supplies for the grade, in particular, have been providing support to the market.
Several market sources have pointed to autumn turnarounds in South Korea, a major producer of 500 ppm sulfur gasoil in the Asia-Pacific region, as a key pillar in the strengthening of the medium sulfur gasoil market.
South Korea’s SK Innovation
South Korea’s SK Innovation will carry out planned works between the end of September and the end of October at its 840,000 b/d Ulsan and 275,000 b/d Incheon refineries, S&P Global reported earlier, citing market sources.
“500 ppm [sulfur gasoil] being supported due to less supply,” said a middle distillate trader based in Singapore, agreeing that the thinner supplies come on the back of the planned turnaround at SK Innovation’s refineries.
Additionally, some sources also expect consumption from demand centers in Southeast Asia to pick up post the monsoon season, further buoying the medium sulfur grade.
“500 ppm sulfur gasoil market is a bit quiet but doing well. More demand from Southeast Asia-post monsoon amid more rebuilding and construction works,” said a source with a Northeast Asian refinery.
500 ppm sulfur gasoil in Asia
In recent tender activity from Vietnam – a key outlet for 500 ppm sulfur gasoil in Asia — Saigon Petro issued a tender seeking a 10,000-mt cargo of 500 ppm sulfur gasoil for delivery to Cat Lai over Oct. 4-6, loading from Singapore/Thailand/Malaysia from Oct. 1-3, or loading from South Korea over Sept. 27-29, according to market sources.
The tender also sought a similar-sized cargo of 95 RON gasoline, closing Sept. 21, with same-day validity.
Moving ahead, Vietnam’s plan to boost domestic production of oil products could cap the upside potential of the 500 ppm sulfur gasoil grade, sources said.
State-owned PetroVietnam’s Dung Quat and Nghi Son refineries plan to provide supply for 80% of domestic oil products demand in the fourth quarter of this year, up from 72% in the third quarter, S&P Global earlier reported previously.
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Source: Platts
