Platts FOB Singapore gasoline Apr trading volume hits 16-month low as COVID-19 lockdowns cut demand

Singapore — Trades in physical FOB Singapore gasoline cargoes during the Platts Market on Close assessment process sank to a 16-month low at 2.15 million barrels in April, reflecting the impact of the coronavirus pandemic on regional trading activity.

The traded volume was last lower in December 2018 at 1.6 million barrels, S&P Global Platts data showed.

Trade volumes in April were also less than half the 4.9 million barrels transacted in March, or down 56.1% month on month, Platts calculations showed.

The bulk of the trades in April were 92 RON gasoline at 1.9 million barrels, down 56% on month, and comprising 89% of the total traded volume, Platts data showed. The balance 250,000 barrels were 95 RON gasoline trades, with no trades reported for 97 RON gasoline.

For the FOB Singapore assessment process, S&P Global Platts publishes bids, offers and trades for FOB Straits loading from terminals in Singapore and Malaysia.

DEMAND DESTRUCTION

The sharp fall in trading volumes was attributed to the demand destruction arising from coronavirus pandemic lockdowns, market participants told Platts.

Multiple countries in Asia including Singapore, Malaysia, Vietnam and Thailand have imposed strict restrictions on domestic movement in a bid to curb the spread of the coronavirus since mid-March. Indonesia, the region's largest buyer of gasoline, banned city workers from returning home during the Muslim holy month of Ramadan, further curtailing regional demand.

According to S&P Global Platts Analytics, Asian gasoline demand in April was estimated to have contracted by 1.24 million barrels, and came after a 1.12 million-barrel contraction in March.

Reflecting the tepid demand, the FOB Singapore 92 RON gasoline crack against front-month ICE Brent crude futures averaged minus $7.01/b in April, down sharply from plus 57 cents in March, Platts data showed.

"April is usually a good month but with the lockdowns, a lot of guys took a hit," one gasoline source said.

Singapore firm Hin Leong filed for bankruptcy protection in mid-April citing severe losses to its trading books, Platts reported earlier. The company accounted for the majority of trades concluded during the MOC process for gasoline during the previous 12-month period, buying a total of 22.25 million barrels of 92 RON, 95 RON and 97 RON gasoline between April 2019 and March 2020 and selling 450,000 barrels of the grades over the same period, according to trades observed during the MOC process.

In the first quarter of 2020, Hin Leong remained a significant buyer, picking up 5.9 million barrels of 92, 95 and 97 RON gasoline during the MOC process

"Trading activity definitely slowed [in April]. Traders were busy trying to find tanks and storage in the contango market rather than sell it right away," another Singapore based trader said.