Japan, a typical net exporter of gasoil, was on track to be a net importer in May with purchases rising following a series of refinery disruptions that weighed on production.
Japan's imports of gasoil rose to around 120,000-150,000t (29,000-36,000 b/d) for May, according to market participants and Vortexa data. This outstripped the country's exports of 17,000 b/d during 1-21 May, pointing the country towards being a net importer.
Japan has been importing increasing volumes of gasoil, with imports exceeding 120,000 t/month from December last year, data from the Petroleum Association of Japan (PAJ) show. Imports during 2020 and 2019 were largely below 120,000 t/month. PAJ figures are unavailable for April and May, although Vortexa data showed that April imports were 125,000t with May at 150,000t.
Japan's refineries have been hit by a string of unplanned shutdowns. Eneos' 145,000 b/d Sendai refinery was shut during 1-18 May after an earthquake, prior to which it was also shut for two months after an earlier earthquake on 13 February. The company's 127,500 b/d Wakayama refinery was also shut down after a fire at a fluid catalytic cracker in late March, only restarting in the second half of May. Its 203,000 b/d Kashima refinery was also off line during 11-25 May because of a technical problem.
These shutdowns have weighed on the country's gasoil production, prompting more imports and reduced exports. This has helped support regional gasoil prices. Asian refining margins for gasoil in May, or Singapore 10ppm (0.001pc) sulphur gasoil assessments against Dubai crude, averaged around $8.12/bl with average refining margins in April lower at around $6.65/bl.
But as Japanese refiners have progressively restarted their refineries during May, domestic supplies are expected to increase and reducing the need for heightened imports in June.
Japan's domestic gasoil demand is also expected to be muted, as the country has extended its Covid-19 emergency measures into June. This could potentially weigh on Asian gasoil margins, which are also likely to be affected by regional demand disruptions caused by further Covid-19 lockdowns.
