Asia Well Supplied With Distillates: Analyst

Tuesday March 5, 2019

Asia is long on gasoil which bodes well for IMO2020 supply, an oil analyst has said.

"Asia is short on fuel oil -- mainly high sulfur fuel oil at present -- but the region is long on gasoil," according to Kang Wu, head of analytics at S&P Global Platts.

"This puts the region in an unique position to deal with IMO2020 where, to some extent, surpluses of gasoil can well be used to complement the shortage of low sulfur fuel oil (LSFO) or IMO-compliant fuels, for bunker use," he added.

Regional oil companies gearing up to produce IMO-compliant fuels include Indian Oil Corporation, Sinopec, CPC and Cosmo Oil.

"Taking advantage of sweet crude supplies at home and the sophistication of many large refineries, and thus flexibilities in the refining system, China may be in a good position to make more LSFO available to markets in the country and outside," Wu said.

Sinopec's Shanghai plant produced IMO-compliant product in January. A 10,000 mtĀ  batch of 0.5% sulfur 380 CST fuel oil was produced from its residual hydro-treater, according to Platts.

However, China's new coastal refineries along the coast have yet to make firm commitments to produce the IMO2020-compliant fuel.