Taiwan's Formosa Petrochemical is likely to skip exports of low sulfur fuel oil for July loading due to run cuts, a company source said June 18.
Formosa Petrochemical is operating its three crude distillation units at the 540,000 b/d Mailiao refinery at an average utilization rate of 440,000 b/d or around 80% of capacity in June, as refined oil product margins remain weak, S&P Global Platts reported earlier.
The refiner typically sells one to three MR-sized cargoes of low sulfur fuel oil cargoes with maximum 0.5% sulfur a month and is one of the major LSFO suppliers in Asia.
In addition to the run cut, the refiner is also looking to shift to gasoline production due to improving gasoline margins.
"We will hold DSAR [desulfurized atmospheric residue] for RFCC feedstock" rather than blending it into low sulfur fuel oil," the source said. "LSFO margins are not good, gasoline is better," the source added.
Formosa might also sell other fuel oil blending stocks such as pyrolysis fuel oil for July loading, but the details have not been fixed, the source said.
Gasoline crack spreads spiked in mid-morning trade in Asia June 18 after the release of data overnight reporting a drawdown in US gasoline inventories outweighed growing concerns of a second wave of coronavirus infections.
The front month July FOB Singapore 92 RON gasoline crack against Brent swap in particular looked poised to see a third consecutive day of double-digit growth - it was pegged by brokers at least 10% higher at 0230 GMT than at the June 17 close, at plus $4.15-$4.25/b.
On the other hand, the Singapore Marine Fuel 0.5%S market remains sluggish due to high inventories and poor demand amid a slowdown in maritime transportation as the coronavirus pandemic hampers international trade, fuel oil traders said.