Australia’s Ampol seeks rare gasoline cargoes as refining operations stay muted
In a rare move, Australia’s Ampol has emerged on the spot market seeking gasoline cargoes to meet regional supply commitments in light of muted refinery operations, industry sources told S&P Global Platts Aug. 25.
Ampol’s tender, which seeks a total of at least 580,000 barrels of 88 RON gasoline in two separate parcels, concurrently also seeks a total of 490,000 barrels of 50 ppm sulfur gasoil, according to tender documents seen by Platts.
Of note, the gasoline supplied by sellers can either be of the straight-run 88 RON gasoline variety, or a blend of 85% 92 RON gasoline and 15% 72 RON naphtha.
Other key specifications for the gasoline sought include a 50 ppm sulfur limit, maximum MTBE content of 2%, as well as a maximum aromatics content of 35% of the volume, details in the tender document stated.
AMPOL’S PHILIPPINES BUSINESS
The tender specifies discharge of cargoes at Irasan and Sta Cruz, both ports in the Philippines in which Ampol has some market share following the signing of a strategic partnership agreement with the Philippines-based Seaoil in December 2017.
Domestically, Seaoil is the largest independent fuel company, owning over 350 retails stations across the Philippine archipelago, according to the company’s website.
“Philippines eased restrictions again. So we might start to see driving activity come back,” one Singapore based source said.
On Aug. 17, President Rodrigo Duterte eased strict lockdown measures in the country’s capital Manila in an attempt to jump-start the country’s economy.
There has been a consistent increase in coronavirus cases in the Philippines, which had prompted the country to reimpose lockdowns early August to curb the outbreak, according to media reports.
Prior to the new lockdowns, driving activity across the Philippines in July had recovered to around 45% below baseline levels, the highest since March, mobility data from Apple showed.
Amid anticipations of higher demand following the easing, Ampol’s refining operations are nevertheless expected to stay muted, with the company’s 109,000 b/d Lytton refinery shut since mid May for maintenance works. Although the refinery is set to restart in September, production is not expected to hit full capacity at least until October, sources with close knowledge of the matter told Platts.
“Hopefully, they [Ampol] will continue buying. The market is in need for more outlets for gasoline,” a second source said.
In the first half of 2020, the Lytton refinery was even noted to have booked a $59 million loss amid poor refining conditions due to the coronavirus pandemic, Ampol said in its earnings release Aug. 25.
OUTLET FOR GASOIL
Ampol’s tender has also been noted to be supportive on the gasoil front, which has inched lower amid ballooning supplies from China.
Market participants estimate that China’s August gasoil exports will total 1.5 million-2 million mt, with September outflows increasing higher to levels between 1.7 million mt and just over 2 million mt.
This would be sharply higher than China’s July exports of gasoil, which tumbled to a 61-month low of just 550,000 mt, latest data from the General Administration of Customs showed on Aug. 24.
The rising supplies have come even as the pace of recovery for regional gasoil demand appears to have suffered a setback, knocked down by fresh COVID-19 cases being reported around the region that have prompted renewed lockdowns and restrictions.
Still, trade sources said gasoil demand remains relatively resilient as it can be channeled for use into multiple sectors and industries in countries, with these providing much needed outlets and helping to mop up excess length in the market.
“Demand for gasoil is there,” an Asian refinery source said Aug. 25, adding that regional refinery run cuts have helped with the supply situation.
“Refineries are not running at full — there are a lot of run cuts, but Australia’s gasoil demand is healthy and the Philippines is okay,” he said.
At the Asian close Aug. 25, the cash differential for 10 ppm sulfur gasoil cargoes for loading from Singapore widened 3 cents/b at minus 35 cents/b to the Mean of Platts Singapore gasoil assessments.
Meanwhile, the physical gasoil crack spread to front-month cash Dubai firmed slightly, widening 4 cents/b day on day at $5.36/b at the 0830 GMT close Aug. 25.