SINGAPORE: The Asian gasoil differential weakened on Monday due to more spot supply out of Taiwan and general oversupply of the fuel globally due to a mild winter in Europe and the United States, industry sources said.
"Nowadays, even during the winter season, the middle distillates market looks bearish," a North Asian trader said.
Refineries are still keeping run rates high due to high margins for gasoline, which is also increasing the supply of diesel and jet fuel, traders said.
"Refineries should be finding a way to maximise production of gasoline," the first trader said.
Taiwan's Formosa Petrochemical Corp has offered an ultra low sulphur diesel cargo for January loading, which is also adding to the supply surplus, traders said.
The refiner is expected to ship out 23 medium-range (MR) sized cargoes of gasoil in January, including 4 cargoes of 10ppm sulphur diesel, 4 cargoes of 50ppm sulphur diesel and 15 cargoes of 500ppm sulphur gasoil, an industry source said.
Vietnam's Petrolimex bought two cargoes of 500ppm sulphur gasoil for Jan. 1 to 5 and Jan. 8 to 12 loading at a premium of about $1 a barrel to Singapore quotes, industry sources said.
The cargoes were bought on a free-on-board (FOB) Singapore and Malaysia basis and were done with a "Form D", which refers to a certificate that proves ASEAN origin giving lower tax rates, one of the sources added.
Vietnam's Saigon Petro cancelled a tender to buy 10,000 tonnes of 500ppm sulphur gasoil for delivery over Jan. 18 to 22, an industry source said.
This could likely be due to high inventory of the fuel in the country, the source added.
India's top environmental court on Friday banned the registration of diesel vehicles in Delhi until Jan. 6 as the city experiences hazardous levels of pollution, in part due to diesel emissions. But the court's ruling gave little detail, sparking a sell-off in automakers' shares on Monday and industry frustration.
Delhi, labelled the world's most polluted city in a 2014 World Health Organization survey, alone makes up about 7 percent of total Indian auto sales, Pawan Goenka, an executive director at Mahindra said.
As the ban is temporary, it might not have a big impact on diesel demand in the country.
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