Major Asian oil exporters close 2025 diesel sales at lower levels vs. 2024
Major northeast Asian oil exporters have mostly finalized their 2025 sales for 10-ppm sulfur diesel exports at lower levels from 2024, trade sources said, underscoring a bearish market outlook for a second straight year.
The ultra-low sulfur diesel (ULSD) cargoes from Taiwanese refiners CPC Corp. and Formosa Petrochemical Corp. were sold at premiums of between 20 cents and 40 cents a barrel to Singapore quotes to Western traders such as Vitol and TotalEnergies, 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 MMbbl per month between January and October this year, down from a monthly average of 16 MMbbl 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.
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