Indonesia's Pertamina June gasoline imports seen steady at 8-9 mil barrels: sources

Singapore — Indonesia's Pertamina will likely import 8 to 9 million barrels of gasoline in June, unchanged from the previous month, as domestic demand remains uncertain amid rising COVID-19 infections, industry sources with close knowledge of the company's import plans told S&P Global Platts.

This is the third straight month that the state-owned company has kept import volumes steady, despite the seasonal uptick in gasoline demand during the Muslim holy month of Ramadan from mid-April till mid-May.

"The [Indonesian] government had made restrictions on domestic travel during Eid, so the demand increase was not very strong," one market source told Platts on May 18, adding that "any extra requirements was covered through spot buying."

Pertamina had sought up to a total of 1.2 million additional barrels of 92 RON gasoline in May through spot tenders, up from 350,000 barrels in April, according to open tenders seen by Platts.

In June 2020, Southeast Asia's largest buyer of gasoline imported 7.464 million barrels of gasoline, Statistics Indonesia data showed.

With Indonesia expected to keep June volumes steady on the month, industry participants warned of potential headwinds in the Asian gasoline complex, as demand from several other net importers have also slowed.

"Indonesian [gasoline] demand is still poor. Other countries such as Vietnam are also seeing a new rise [in coronavirus cases]. The demand outlook in the near term looks very uncertain," one Singapore-based source said.

Another gasoline trader also warned of potential new wave of infections in Indonesia in the near term, which should it happen, would exert more downside pressure on Indonesia's demand-side recovery.

"There was a ban on travel during specific days over Ramadan. But it seems that people have found other ways to return home. This raises the risk of another spike in infections in the later months," the trader said.

According to John Hopkins University data, Indonesia continues to report between 3,000 and 5,000 of new coronavirus infections daily, which although sharply lower than the 14,518 cases on Jan. 30, has yet to decline any further.

Reflecting the uncertain demand backdrop, the backwardation in front month gasoline timespreads have narrowed on month.

The FOB Singapore 92 RON gasoline June-July swap spread was assessed at 38 cents/b on May 18, down from the average of 62 cents/b in April, Platts data showed.

In a backwardated market, the price for the prompt delivery month is higher than the forward delivery month, encouraging participants to move cargoes out of storage to take advantage of higher prompt prices.