Asia’s spot diesel prices have rebounded to premium levels for August-loading cargoes, prompting more refiners to offer cargoes this week, trade sources said on Thursday.
The price recovery comes amid expectations of tighter supply after months of weakness caused by oversupply and a closed arbitrage window for exports to Europe.
South Korea’s GS Caltex is the third refiner to issue a sell tender this week after top South Korean refiner SK Energy SKENGG.UL and Taiwan’s Formosa Petrochemical Corp 6505.TW.
GS Caltex is looking to sell at least two cargoes of 10 ppm sulphur diesel loading on Aug. 7-9 and Aug. 15-17, and one cargo of 50 ppm sulphur diesel loading Aug. 8-10, three sources with knowledge of the matter said. The tender will close on July 14 with bids valid on the same day.
The tender was issued after cargoes sold by SK Energy, owned by SK Innovation 096770.KS, fetched their first premiums in four months.
SK Energy sold three cargoes, mostly loading in the first half of August, at parity to a small premium of up to 30 cents a barrel to Singapore quotes on a free-on-board (FOB) basis, traders said.
July-loading parcels from the South Korean refiners were concluded at discounts between 30 cents a barrel and 70 cents a barrel to Singapore quotes on an FOB basis.
Refining margins for 10 ppm sulphur diesel have trended in line with the uptrend for cash premiums, closing at almost a one-month high, Refinitiv Eikon data showed.
The companies do not typically comment on commercial matters.
However, spot premiums could remain capped by lacklustre regional demand and as the arbitrage window to Europe remains close, traders said.
Sufficient supply of China export cargoes, likely at about 1 million metric tons for July loading, and up by around 200,000 tons from earlier estimates, kept a lid on gains.
Source: Reuters reported by Trixie Yap, edited by Robert Birsel and Sherry Jacob-Phillips
