September 4, 2015
Asia's jet/kerosene market saw signs of a pick-up in jet fuel demand Friday, as arbitrage cargoes head out to the US.
Among them, Vitol has fixed the Yayoi Express to load 35,000 mt of jet fuel from Japan's Kawasaki over September 11-13 and bound for the US West Coast or US Gulf Coast.
The Los Angeles jet fuel differential dropped another 50 points Friday to NYMEX October ULSD minus 8.50 cents/gal, its lowest since February. Platts assessed the USGC differential Friday up 50 points to NYMEX October ULSD futures contract minus 16 cents/gal.
Several ships were seen fixed to carry jet fuel out of Asia, which has maintained abundant supplies over the past several months.
High Strength was heard to be carrying jet fuel from South Korea to Los Angeles, according to market sources. The ship is set to arrive September 14, according to cFlow, Platts trade flow software.
The Oriental Emerald was heard fixed to be carrying jet fuel from Sikka, India, to the USWC for Reliance, shipping sources said. The ship was set to load Wednesday but was seen still in port Thursday, Platts cFlow showed.
Trafigura also put on subjects the Analipsi Lady to carry jet fuel from Taiwan to the USWC/USAC, according to market sources. The ship is set to load September 17.
"There are more September spot cargoes from Asia to the US compared with last month," a South Korean trader based in Singapore noted.
The usual flow of cargoes from Asia to Europe was also given a leg up with lower freight rates.
"Freight from South Korea to the UK used to be $4 million for an LR2 [vessel], it's now $3 million," the South Korean trader said, adding that demand from the West, lower freight rates and lower Exchange of Futures for Swaps, or EFS, have made the September market much better than August.
A shipping source also noted that freight from South Korea to the UK had "softened a little bit in the last three weeks."
But if there appears to be more fixtures heading out from South Korea to Europe, this is because the cargoes have to reach Europe ahead of winter demand, according to a trader in South Korea.
Further upside to the Asian jet/kerosene market would also come from scheduled refinery turnarounds in South Korea from September.
In China, West Pacific Petrochemical, or Wepec, plans to lower jet fuel exports from its 10 million mt/year (200,000 b/d) Dalian refinery to 70,000 mt in September, from 99,000 mt in August. Total oil product exports were planned at 338,000 mt in September, down 8% from 366,000 mt in the previous month.
In other news, commercial onshore middle distillates stocks -- which include gasoil, jet fuel and kerosene -- in the main trading hub of Singapore fell 0.86% week on week to 13.43 million barrels in the week ended September 2, data from government agency International Enterprise Singapore showed Thursday.
In Europe, despite constrained ullage, BNP Paribas data Friday showed a 4.7% draw of 320,000 barrels in the week ending Thursday. The report placed total jet storage levels at the refining hub at 5.67 million barrels, nearly double year on year and 41% above the five-year average.