Tightening supply of 500 ppm sulfur gasoil from ongoing refinery maintenance is pushing up premiums on the grade, market sources said Wednesday.
The FOB Singapore 500 ppm sulfur gasoil cash differential rose steadily from minus 31 cents/b last Monday to be assessed at minus 7 cents/b Tuesday — a year-to-date high since S&P Global Platts moved its benchmark to 10 ppm sulfur gasoil from 500 ppm sulfur gasoil on January 1.
It was last higher on December 29 at 41 cents/b.
Market sources attributed the strength to a cap in supply from Northeast Asian refineries because of ongoing turnarounds.
“In the North Asia side, Japan is experiencing a tightness in supply from the turnarounds. The effect of the maintenance which started last month has started to kick in,” a trader said.
In China, there has been no announcement on the second round of oil product export quotas, which is typically issued by the end of the first quarter.
“Due to the turnaround in China over April-May, part of the quota should be retained in the domestic market, leaving less for exports,” the trader said.
In India, strong economic growth is driving demand for diesel amid refinery turnarounds in the country.
“Indian exports are a lot lower due to higher domestic offtake,” another trader said.
Latest Indian sell tenders have also been awarded at higher levels.
Private refiner Essar Oil sold up to 70,000 mt of 500 ppm sulfur high speed diesel for May 10-14 loading from Vadinar at a premium of 50 cents/b to the May average of Mean of Platts Arab Gulf Gasoil assessments on a FOB basis. In comparison, it last awarded a similar cargo for May 3-7 loading from Vadinar at a premium of 25-30 cents/b to the May average of MOPAG Gasoil assessments, FOB.
The market is expected remain supported as the region heads deeper into the maintenance season.
“We expect to see strengthening in this region,” the trader said.
Source: PlattsPrevious Next