Asia middle distillates: Key market indicators this week

The Asian middle distillates market is set to enter the week of June 14-18 on a steady-to-weaker note. Gasoil demand is expected to be steady as market participants await fresh pricing cues while the jet fuel/kerosene sector could see demand from air cargo freight, even as demand for international travel remains hampered by COVID-19 related restrictions.

Jet Fuel/Kerosene

** The balance month June-July jet fuel/kerosene time spread was pegged at minus 40 cents/b at 0213 GMT June 14, widening 7 cents/b from the assessed minus 33 cents/b at the Asian close June 11, S&P Global Platts data showed.

** The FOB Singapore jet fuel/kerosene cash differential rose in the week ended June 11. The cash was differential assessed at minus 34 cents/b to Mean of Platts Singapore jet fuel/kerosene assessments on June 11, narrowing 16 cents/b on the week, Platts data showed.

** Recovery of the Asian aviation industry is expected to remain slow, however, global air cargo demand is expected to remain a bright spot for the sector with freight ton kilometers, or FTK, rising 4.4% in March 2021 compared with the March 2019 level, latest data from the International Civil Aviation Organization showed.

** Singapore was a net exporter of aviation fuels in the week ended June 9, with a volume of 93,328 mt, marking a 170.78% spike from the previous week, Enterprise Singapore data showed. The bulk of exports went to Australia at 31,322 mt. In the same week, total imports into Singapore fell to 15 mt, down from 8,149 mt the previous week. The bulk of imports came from France at 10 mt.

** The third quarter-fourth quarter jet fuel/kerosene swap spread -- an indication of near-term sentiment -- averaged minus 13 cents/b June 7-11, narrowing 16 cents/b from the previous week's average of minus 29 cents/b.

Gasoil

** The prompt-month June-July gasoil market structure was pegged at 1 cent/b at 0213 GMT June 14, steady from the plus 1 cent/b assessed at the Asian close June 11, Platts data showed.

** The front-month July Exchange of Futures for Swaps, or EFS, spread was pegged at minus $4.50/mt at 0213 GMT June 14, widening from the June 11 assessment of minus $4.39/mt, Platts data showed.

** Trade sources reiterated the lack of clarity on the Chinese export program for June and July, but market consensus was pointing to an overall tightening in supply, especially for lower sulfur grades.

** Market participants will be eying award details for South Korean refiner GS Caltex's gasoil sell tenders. At the end of last week, the company emerged on the spot trading scene for the second time this month, offering two cargoes of 10 ppm sulfur gasoil, 300,000 barrels each, for loading from Yeosu over July 11-15 and July 26-30. GS Caltex is also offering four similar-sized cargoes of 500 ppm sulfur gasoil for loading from Yeosu over July 9-13, July 11-15, July 13-17 and July 18-22. The sell tenders will close on June 14, with same-day validity.

** The Q3-Q4 gasoil swap spread -- an indication of near-term sentiment – averaged 60 cents/b over June 7-11, widening 16 cents/b from the previous week's average of plus 44 cents/b.