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Japan's ENEOS cuts weekly wholesale oil product prices by $4.53/b: traders

Tokyo — Japan's largest refiner ENEOS cut the weekly domestic wholesale base price of its five major rack petroleum products by Yen 3,000/kiloliter ($4.53/b), market sources told S&P Global Platts Sept. 16.

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The revised prices are effective through Sept. 17-23 for cargoes loaded by tank lorry, the sources said.

After the cut, ENEOS' base price for gasoline will be Yen 42,500/kiloliter, for kerosene Yen 45,000/kiloliter, for gasoil Yen 45,000/kiloliter, for low sulfur A-fuel oil Yen 43,500/kiloliter, and for A-fuel oil at Yen 43,000/kiloliter. A-fuel is a blend of gasoil and fuel oil in a 90:10 ratio.

ENEOS declined to comment on its wholesale prices when contacted by Platts.

Spot gasoline prices plunged ahead of the cut in the base prices. Especially in Hanshin, west of Japan, cheap cargo sourced from independently-operated secondary tanks have pushed down the spot prices for gasoline to the level well below the base prices, according to traders.

"Some traders' inventories have not yet been replenished as tankers [from South Korea] are delayed due to typhoons," said a local trader in Hanshin, adding that if the supply of the traders are normalized, excess supply in the Hanshin region will increase further.

Japan's domestic spot gasoline rack prices in Hanshin, was assessed at Yen 41,200/kiloliter on Sept. 15, down Yen 3,100/kiloliter from a week earlier, already well below the base prices revealed Sept. 16, Platts data showed.

The spread between Japan's domestic gasoline rack price in Hanshin and Japan's import parity for gasoline from South Korea averaged Yen 6,600/kiloliter as of Sept. 15, up Yen 1,400/kiloliter, or 26.9%, from the August average, according to Platts data.

The import parity price is calculated as a premium to Mean of Platts Singapore 92 RON gasoline assessments plus freight costs for an SR ship on the South Korea-Hanshin-Japan route, insurance and taxes.

Japan's domestic gasoline shipments were estimated at 4.99 million barrels in the week ended Sept. 12, down 19% from the week ended Sept. 5, according to Platts calculations based on Petroleum Association of Japan data.

ENEOS adds Yen 1,000-1,500/kiloliter to its base prices when selling to traders and distributors, while retail gasoline stations that buy directly from ENEOS have to add Yen 3,000/kiloliter to the base price, market sources said. The refiner typically announces its weekly prices midweek for cargoes loading from the next day until the same day of the following week.

ENEOS has a domestic market share of around 50%, and its prices are closely tracked by two other major refiners in Japan -- Idemitsu Kosan and Cosmo Oil.

The movement in ENEOS' domestic rack prices typically follow trends in crude procurement costs rather than movement in global product prices, industry sources said. Its weekly prices are based on the daily average of the Platts Dubai and Oman crude benchmarks.

The crude oil procurement cost decreased Yen 2,830/kiloliter on average over Sept. 8-14, according to Platts calculations.

ENEOS WEEKLY DOMESTIC WHOLESALE PRICE (YEN/KILOLITER):

Delivery period
Sept. 3-9
Sept. 10-16
Sept. 17-23
Change
Gasoline
46,500
45,500
42,500
-3,000
Kerosene
49,000
48,000
45,000
-3,000
Gasoil
49,000
48,000
45,000
-3,000
Low sulfur A-Fuel Oil 0.1%
47,500
46,500
43,500
-3,000
A-Fuel Oil 0.5%
47,000
46,000
43,000
-3,000

Source: Market sources