Business center
Post trade leads
Rank promotion
You are at: Home » News » internal »

Asia's 2019 term gasoil negotiations to consider several factors

Increase font size  Decrease font size Date:2018-10-18   Views:668
The annual gasoil term price discussion for gasoil cargoes loading in East Asia in 2019 from key regional export hubs could see intense debate over late October to November. This is amid the higher than expected prompt cash differential, as well as demand uncertainty in the later half of next year, in the wake of the International Marine Organization's marine fuel specification change in 2020, trade sources said on Tuesday.

Further compounding the term discussions would be the increase in gasoil supply from greenfield refineries across Asia and Middle East.
In addition, China's attempts to reduce diesel trucks usage over the next few years, in an attempt to curb pollution, could see a shift away from diesel consumption and increase in gasoil exports.

According to data from S&P Global Platts, the FOB Singapore 10 ppm sulfur gasoil cash differential year-to-date average, stands at premium of 30 cents/barrel over the Mean of Platts Gasoil assessment. The FOB Singapore 500 ppm sulfur gasoil differential year-to-date average stands at a discount of 56 cents/b to MOPS Gasoil assessment.

Taiwan's Formosa Petrochemical Corp.'s annual term gasoil agreement is closely watched in East Asia, and will likely set the tone for other regional suppliers' 2019 term prices.

For 2018 term gasoil cargoes, Formosa's premium for the ULSD was a premium of 22 cents/b to the monthly average of MOPS Gasoil assessments on FOB Mailiao basis, while their 500 ppm sulfur gasoil term premium stood at a discount of 65 cents/b to the monthly average MOPS Gasoil assessments on a FOB Mailiao basis.

The recent uptrend in FOB Singapore 10 ppm sulfur gasoil cash differentials since September could also be a feature in the upcoming East Asian gasoil term discussions.

The cash differential for the FOB Singapore ULSD surged to its highest level this year, breaching the $1/barrel mark, since S&P Global Platts moved the benchmark to 10 ppm sulfur gasoil from 500 ppm sulfur gasoil on January 1.

On Monday, premiums were assessed at $1.07/b to Mean of Platts Singapore gasoil assessment, FOB, jumping 10 cents/b day on day as firm fundamentals continued to fuel the middle distillate to higher levels.

Industry sources attributed the firm sentiment to strong buying interest coupled with tighter-than-expected supply, due to limited outflows from Japan, India and Taiwan, amid scheduled refinery maintenance in the fourth quarter.

The International Maritime Organization will drop bunker sulfur limits to 0.5% sulfur on January 1, 2020, from 3.5% sulfur currently and this has spurred much discussion among industry participants.

These discussions revolved around the conversion of high sulfur fuel oil to 0.5% sulfur fuel, the increase in blending gasoil into the marine fuel oil pool, the increased uptake in demand for marine gasoil by ships globally and finally the increase fitting of Exhaust Gas Cleaning Systems (Scrubbers) to reduce sulfur emission.

About half of the global bunker demand, or 150 million mt, will become gasoil or fuel oil with sulfur content of 0.1%-0.5%, out of 300 million mt of demand in 2020, up from about 15 million mt in 2017, said Marine and Energy Consulting Limited's managing director Robin Meech at the Singapore International Bunkering Conference and Exhibition in early October. Residual fuel oil demand with 3.5% sulfur will drop to 70 million mt in 2020 from about 220 million mt in 2017, Meech added.

It is conceivable to see the effect of IMO 2020 diesel pull into the marine bunker pool impacting the Asian gasoil supply/demand market as early as the second half of 2019, as shipowners start seeking and testing the new blended fuels ahead of the January 1, 2020 dateline.

Asia and the Middle East is expected to see the bulk of greenfield refineries coming on stream, an analyst said. In 2018 alone, both Asia and the Middle East would add around 1 to 1.1 million b/d of additional refining capacity, according to data from Mckinsey.

However, additional refining capacity from both these regions would drop to around 700,000 b/d in 2019, before rising to around 1.7 million b/d by 2020, the data showed. These new refineries will be located in Saudi Arabia, Malaysia, Brunei and China.

The prospect of lower diesel consumption by trucks in China, as part of the ongoing effort to combat pollution, could see increased diesel exports from the world's number one crude oil importer.

One such solution proposed by the Chinese government has been the possible ban in the transportation of coal, ore and steel via trucks, with the alternative option being to rail the material, Platts reported earlier. Other solutions include an increase in the usage of LNG fueled trucks. According to Xinhua, a total of 96,000 LNG fuel trucks were produced in 2017, up from 19,600 trucks in 2016, based on an industry report.

In the first eight months of 2018, Chinese refiners exported 13.26 million mt of gasoil, up 22.4% year on year or 10.83 million mt.
[ Search ]  [ ]  [ Email ]  [ Print ]  [ Close ]  [ Top ]

Total:0comment(s) [View All]  Related comment

Home | About | Service | copyright | agreement | contact | about | SiteMap | Links | GuestBook | Ads service | 京ICP 68975478-1
Tel:+86-10-68645975           Fax:+86-10-68645973
E-mail:yaoshang68@163.com     QQ:1483838028