SUBSCRIBER NOTE: Platts Singapore gasoil to reflect 10 ppm sulfur from 2018

Following feedback during its formal consultation process, Platts will lower the sulfur specification of its flagship Singapore and FOB Arab Gulf Gasoil assessments to 10 ppm from the current 500 ppm from January 2, 2018.

The lower sulfur specifications reflect changing supply and demand trends across the regions, as well as the fact that global waterborne diesel trade is now predominantly maximum 10 ppm, known as ultra-low sulfur diesel.

Platts opened a consultation on this proposed change in September 5, 2016 (http://www.platts.com/subscriber-notes-details/27664052). Since that time it has discussed the proposal in open forums, online webinars and a variety of bilateral meetings involving a full range of stakeholders.

DETAILS OF CHANGE: From January 2, 2018, Platts FOB Singapore, FOB Arab Gulf, FOB Arab Gulf LR2 and FOB Korea Gasoil assessments will begin to reflect maximum 10 ppm sulfur. The following assessments and codes will be affected:

Assessment Code FOB Singapore Gasoil POABC00 FOB Arab Gulf Gasoil POAAT00 FOB Arab Gulf LR2 Gasoil AAKBT00 FOB Korea Gasoil POAIE00

Platts will also assess differentials and strips in these markets basis gasoil with maximum 10 ppm sulfur.

Note that Platts C+F Japan Gasoil assessment already reflects maximum 10 ppm sulfur gasoil.

CURRENT PHYSICAL ASSESSMENTS: As of December 2016, Platts publishes assessments for four grades of gasoil on an FOB Singapore basis: medium sulfur grade 0.25% (2,500 ppm); low sulfur gasoil 500 ppm and 50 ppm; and ultra-low sulfur diesel 10 ppm.

In the Middle East, Platts publishes assessments for four grades of gasoil on an FOB Arab Gulf basis: 0.25% (2,500 ppm), 500 ppm, 50 ppm and 10 ppm. Platts also publishes two grades on an FOB Fujairah basis: 500 ppm and 10 ppm.

Platts publishes assessments under the names "Gasoil" and "Gasoil 0.05%" for Singapore and Arab Gulf that currently represent fuel with a maximum of 500 ppm sulfur. Under the terms of the announced change, the assessments named "Gasoil" will, on January 2, 2018 be changed to reflect 10 ppm sulfur, while those titled "Gasoil 0.05%" will remain separate and continue to reflect 500 ppm sulfur.

CURRENT DERIVATIVE ASSESSMENTS: Platts publishes assessments for Singapore Gasoil derivatives that settle against Platts FOB Singapore Gasoil assessments covering 12 calendar months forward. While these announced changes do not affect the methodology of these assessments, Platts derivatives assessments will reflect the change in the underlying basis from the January 2018 contract month forward.

BACKGROUND: Platts has previously lowered the sulfur in these assessments. On January 2, 2013, Platts lowered the sulfur specification of its benchmark FOB Singapore Gasoil and FOB Arab Gulf Gasoil assessments to 500 ppm from 0.5% (5,000 ppm). That change had initially been proposed in a subscriber note published in August 2011 and reflected Asia's transition to cleaner fuels.

While announcing that change, Platts said that it would continue to study the market and observe trade flows to ensure the benchmark continued to evolve as the broader industry moved towards even lower-sulfur diesel standards.

RATIONALE FOR THE CHANGE: Since 2013, waterborne trade across Asia and the Middle East has continued to evolve and move towards lower sulfur standards, while national standards across the regions have also seen a tightening of sulfur limits.

On August 25, Platts published a white paper titled "Platts Asia Gasoil Benchmarks -- Next Stage of Evolution," which discussed in greater detail industry trends that may warrant a change in the gasoil sulfur specifications.

The white paper can be found at http://www.platts.com/IM.Platts.Content/InsightAnalysis/IndustrySolutionPaper s/SR-asia-gasoil-benchmarks-evolution-082016.pdf

QUALITY DIFFERENTIAL: For the switch to 10 ppm gasoil from January 2018, Platts will continue to review the need for a recommended differential to be used by counterparties to shift their 0.05% sulfur positions to 10 ppm sulfur.

Platts invites feedback on the requirement for such a recommendation, but notes that in contrast to the previous change in 2013, Platts will continue to publish an assessment of gasoil reflecting the higher sulfur specification under the name "Gasoil 500 ppm".

TRANSITION PHASE: During the lead-up to the change towards the end of 2017, Platts will employ a similar approach to published differentials and strips as it used in 2012 ahead of the 2013 change.

Platts will include the details of this approach in a separate subscriber note.

Please send all comments, feedback and questions to asia_products@spglobal.com and pricegroup@spglobal.com.

For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing.

Platts will consider all comments received and will make comments not marked as confidential available upon request.