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Indonesia’s gasoline demand faces headwinds from COVID-19 surge, fresh lockdowns

Indonesia, the top buyer of gasoline in Southeast Asia, is likely to face sluggish motor fuel demand in the near term, as driving in major cities dropped last month amid a renewed lockdown and travel curbs to combat the spread of the coronavirus pandemic, industry sources told S&P Global Platts Oct. 1.

Driving activity across Indonesia scaled back last month, dropping nearly 20-25% below baseline levels end-September — the lowest since mid-June and far from the highs of 40% above baseline levels seen early-August, mobility data from Apple showed.

The slowdown comes following a slate of new lockdown measures put in place to curb the spread of the pandemic, which saw a city-wide lockdown in the capital city of Jakarta being re-imposed Sept. 14.

On Sept. 25, Jakarta further extended movement restrictions for another two weeks as coronavirus cases continued to rise.

According to local media reports, Indonesia continues to reel under the rising cases of coronavirus domestically, with Jakarta struggling to contain the virus as hospitals overflow with patients.

As of Oct. 1, Indonesia had over 287,000 confirmed cases of coronavirus infections, making it as the second highest infected country in Southeast Asia, behind the Philippines which has reported over 311,000 cases, data from John Hopkins University showed.

“The new lockdowns will be bearish for gasoline for sure. The last time they [Indonesia] went under lockdown, regional demand just collapsed,” one Singapore-based source said.

Indonesian gasoline demand tumbled 38.3% on the month when the country had enforced movement restrictions in May, according to Statistics Indonesia data.

Mirroring the weakness, the FOB Singapore 92 RON gasoline crack against front-month ICE Brent crude futures averaged minus $1.46/b in May, down sharply from plus $4.17/b that averaged in May 2019, Platts data showed.

Gasoline import demand

With stalling driving activity, more industry participants are expecting Indonesia to keep off the spot market for gasoline at least until the end of 2020, drawing its monthly intake of motor fuel solely from its existing term tenders.

“With the COVID-19 situation still quite uncertain, I don’t think Pertamina will be in a rush to buy too much,” another Singapore-based source said, adding that “Pertamina has enough stocks now too. So unless there is a sudden pick in activity, their term should be enough.”

A second source echoed similar views: “We have not seen them [Pertamina] come out to buy spot in June. But even then It was to fill a small gap in their supplies.”

From October to December, Pertamina has contracted a total of at least 1.19 million barrels of 92 RON gasoline and 2.83 million barrels of 88 RON gasoline per month to various regional sellers, with the latest term tender for 1.64 million barrels of 88 RON gasoline having awarded Sept. 25, according to open tenders seen by Platts.

The tender for 1.64 million barrels of 88 RON gasoline per month was heard to have been awarded to several trading houses at premiums within the range of 20-50 cents/b to the average of either the MOPS 92 RON gasoline assessments or Mean of Argus Singapore 92 RON gasoline assessments, Platts previously reported.
Source: Platts

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