The FOB Singapore 500 ppm sulfur gasoil cash differential sank to a record low based on the new 10 ppm sulfur gasoil pricing basis at a discount of $1.54/b to the Mean of Platts Singapore Gasoil assessment at the close of Asian trade Tuesday.
It is the lowest the 500 ppm sulfur grade has been since the sulfur content in Platts benchmark gasoil was changed to 10 ppm from 500 ppm on January 1, 2018.
The sharp decline was attributed by traders to softer demand for 500 ppm sulfur grade in the region amid the ongoing fishing ban in China, as well as the monsoon season in Southeast Asia and India.
Adding to this, supply is also set to increase as refineries return from spring turnaround season, traders added.
“500 ppm gasoil is weak in the region” a Singapore-based trader said. “The market is fundamentally weak due to the [South China Sea] fishing ban, monsoon rains in India and Southeast Asia, Vietnam’s new refinery — creating this lack of demand.”
Indian gasoil exports have been rising as domestic demand sees a seasonal downturn during the monsoon, when traveling is reduced due to heavy rain and hydropower generation is used instead of diesel.
Reflecting the bearish market, during Tuesday’s Platts Market on Close assessment process, Chinese state-owned trader Unipec offered three 500 ppm sulfur gasoil cargoes for loading over five-day laycans between July 18 and August 2, at discounts ranging between $1.60/b and $1.40/b to the MOPS Gasoil assessment. The offers were standing till the close of the MOC process.
The offers saw the 500 ppm sulfur gasoil cash differential fall by 56 cents/b from Monday’s close of MOPS Gasoil assessment minus 98 cents/b.
In addition, benchmark 10 ppm sulfur gasoil cash differential also stood an all-time low of MOPS Gasoil assessment minus 27 cents/b based on the new 10 ppm pricing basis, but unchanged from the previous close.