South Korea jet fuel differential at lowest since 2008
The South Korean jet fuel differential has fallen to the lowest levels since at least 2008 amid weak domestic demand caused by the impact of Covid-19 and higher exports.
The differential, or premium or discount to Singapore spot assessments for jet fuel cargoes loading from South Korea, fell to -$4/bl yesterday, the lowest levels seen since at least July 2008, according to Argus assessments. It was last assessed at a previous low of -$3.90/bl on 22 August 2008.
The coronavirus pandemic's impact on jet fuel demand has weighed on the differential. South Korean air passenger traffic in March had slumped by 84pc from pre-coronavirus levels to 1.74mn passengers. This was also the first time the monthly total fell below 2mn since records began in 1997, the Korea civil aviation association said. Flagship airline Korean Air announced more flight reductions yesterday, most of which will last until April or May.
South Korean refiner GS Caltex has sold May-loading jet fuel at around a deep $3.40-3.50/bl discount to the average of Singapore spot assessments for the whole of May, said market participants, although this could not be confirmed with the refiner. It could have sold one Long Range 2 (about 90,000t) cargo, or one 300,000 bl Medium Range (MR) cargo and one LR1 (about 60,000t) cargo, said market participants, although this could not be confirmed with GS Caltex.
GS Caltex had also previously sold seven MR jet fuel cargoes for loading in April amid weak domestic demand. This was much higher than its typical monthly offerings of one to three MR cargoes. South Korean refiner SK Energy also exported more jet fuel in April because of weaker demand. While the exact increase is unclear, SK Energy typically exports each month a total of about seven to 10 MR jet fuel cargoes under spot and term agreements,.
by Sarah Giam
source: Argus Media
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