Major Asian oil exporters close 2025 diesel sales at lower levels vs 2024, sources say (updated)

Formosa Petrochemical

18/12/2024 08:51

(Updates with further details)
    By Trixie Yap
       SINGAPORE, Dec 18 (Reuters) - Major northeast Asian oil
exporters have mostly finalised their 2025 sales for 10ppm
sulphur diesel exports at lower levels from 2024, trade sources
said, underscoring a bearish market outlook for a second
straight year.
    The ultra-low sulphur diesel (ULSD) cargoes from Taiwanese
refiners CPC Corp and Formosa Petrochemical Corp  6505.TW  were
sold at premiums of between 20 cents and 40 cents a barrel to
Singapore quotes to Western traders such as Vitol  VITOLV.UL 
and TotalEnergies  TTEF.PA , while supply from South Korea's GS
Caltex and SK Energy was sold at discounts between 10 cents and
20 cents a barrel, multiple sources told Reuters.
    Japan's ENEOS sold 2025 cargoes at discounts of up to 30
cents per barrel, they added.
    This compares with premiums of between 50 cents and $1 per
barrel for this year's term supplies, marking a second straight
year of decline in term prices.
    These companies typically do not comment on commercial
deals. 
    South Korean refiners have also slightly reduced 2025 ULSD
term sales from 2024 due to lower prices, two of the traders
said, although the volume could not be confirmed. 
    With lower term requirements, these refiners could end up
offering more spot cargoes next year or cutting runs depending
on the situation, one of them said.
    South Korean diesel exports averaged 13.9 million barrels
per month between January and October this year, down from a
monthly average of 16 million barrels in the same period a year
ago, government data showed. 
    Traders are not interested in paying up for term supply amid
persistent worries about weak regional demand, with supplies
likely to remain sufficient given capacity growth in China and
India next year, one northeast Asian refinery source said.
    Refineries in Asia are not even running at full steam yet
and supplies are already more than enough for some regions in
northeast Asia, another one of the sources said.
    The lower term prices may lead to Asia's supply becoming the
cheapest globally, allowing swing supplies from the Middle East
and India to pivot more cargoes west and possibly opening up
arbitrage opportunities for Asia-Pacific cargoes to Europe, two
trade sources said. 
    Stricter sanctions on Russia that target more shipping
vessels from Moscow's so-called shadow fleet could end up
hindering the movement of some oil products and buyers may have
to seek alternative sources.
    Meanwhile, analysts are expecting some demand improvement in
the West, which in turn may help buoy Asian refining margins.
    Despite the year-on-year declines, 2025 term prices are
still an improvement from this year's spot deal levels - which
average at discounts of around $1 a barrel, Reuters records
showed.  MDIS/TENDA  

 (Reporting by Trixie Yap.  Editing by Muralikumar Anantharaman
and Mark Potter)
 ((trixie.yap@thomsonreuters.com;))