Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you a link to reset your password.


  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you a link to reset password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list
Oil

Japanese traders' appetite for kerosene imports stimulated by cold

Commodities | Energy | Oil | Crude Oil | Refined Products | Coronavirus

Crude throughput hindered on reduced refinery runs

Oil

Platts Market Data – Oil

Oil

Singapore Crude Oil & Refined Products Forum 2020

Bunker Fuel | Oil | Refined Products | Fuel Oil | Gasoline | Shipping | Marine Fuels

Security incident occurs on oil tanker off UK: sources

Japanese traders' appetite for kerosene imports stimulated by cold

Highlights

Japan's July kerosene imports highest for month since 2003

Talks underway on South Korean kerosene supply

Most of Japan forecast to experience cold weather Dec-Feb

Tokyo — Japanese traders are looking to boost imports of kerosene in the coming months despite the recent growth in middle distillate stockpiles in Hokkaido, the largest demand center for heating oil, as the country is expected to have a colder-than-average winter.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

Fuel distributors are poised to source most of Japan's heating oil requirements from South Korea as import prices are much lower than domestic.

"Import economics are still good, but our storage is almost full," a Japanese trader said. "We will have to pause kerosene imports."

Japanese kerosene imports have been rising in recent months when seasonally there is almost no demand for heating because of the greater profitability of importing it from South Korea.

The premium of Japan's domestic kerosene rack price in Kanagawa to the import parity for kerosene from South Korea averaged Yen 12,200/kiloliter ($18.39/b) over Sept. 1-24, up Yen 2,200/kl, or 22.0%, from the August average, according to S&P Global Platts data. The premium averaged Yen 10,000/kl in August and Yen 5,900/kl in July, according to Platts data.

The import parity price is calculated as a premium to Mean of Platts Singapore jet kerosene assessments plus freight costs for a short-range ship on the South Korea-Kanagawa-Japan route, insurance and taxes.

The FOB Singapore jet fuel/kerosene cracks against front month cash Dubai have been negative since mid-August due to demand destruction caused by the coronavirus pandemic triggering a collapse in both air travel and jet fuel demand.

However, Japan's domestic kerosene rack price reacted slowly to this because the largest domestic refiner, ENEOS, kept its wholesale product prices relatively high, widening the premium to FOB South Korea prices.

Imports soar

Japan's kerosene imports shot up to 18,138 b/d in July, close to 18 times higher than the 1,013 b/d a year earlier, and close to triple June's 6,503 b/d, according to the Ministry of Economy, Trade and Industry data. Kerosene imports were the highest for the month since July 2003, according to METI data.

Kerosene stocks in Hokkaido were 635,500 kl or 3.997 million barrels in July, which was above the five-year average of 390,300 kl, according to the latest data from the Hokkaido Bureau of Economy, Trade and Industry.

The increase in kerosene imports helped fill up Japanese traders' kerosene storages, including in Hokkaido, and caused some traders to put their imports on hold until there were stock withdrawals, traders said.

Cold winter

However, Japanese traders' kerosene imports may pick up in the coming months as most of the country is forecast to have a cold winter.

Ten out of Japan's 12 regions are forecast to have temperatures below the 30-year average over December-February, during the country's peak winter heating demand season, the Japan Meteorological Agency said in its winter weather forecast Sept. 25.

"Talks of winter kerosene term contracts are underway now, and the way I see it, Japan has a fairly high level of kerosene in stocks already, at 2.5 million-2.6 million kl, which is equivalent to roughly 16 million barrels," a South Korean refining source said.

"I would say demand [for kerosene] is also determined by how cold the winter is going to be. Also, if refiners are producing less kerosene due to poor margins, we could run the risk of a supply shortage, and kerosene prices may surge then. As such, we could see more reliance on Japanese imports from neighboring countries like [South] Korea, Taiwan and China," the source added.

Japan's refinery runs will "likely recover from current levels during winter" because refiners would increase the production of kerosene for heating demand, the Petroleum Association of Japan's president Tsutomu Sugimori said Sept. 17.

Japan's refinery runs have declined sharply in recent months because of plummeting jet fuel demand amid border restrictions in light of the pandemic. The average refinery run rates have retreated in recent weeks to the 60% range, having briefly risen above 70% in mid-August during the peak summer holiday season, according to PAJ data.