Taiwan’s CPC offered 38,000 tonnes of straight-run low sulphur fuel oil (LSFO) for August lifting from Kaohsiung in a rare move, traders said on Wednesday.
The tender closes on July 24, with two-day validity.
The reason behind the unusual offer was not immediately known. CPC had in December sealed a rare term agreement to buy 720,000 tonnes of LSFO at premiums of $110.00-$120.00 a tonne to Singapore spot quotes on a cost-and-freight (C&F) basis from Shell.
Traders said the main reason behind this requirement is that more of the fuel oil production from its refinery will be used as feedstocks for the new gasoline-making residual fluid catalytic cracker (RFCC).
The RFCC was expected to be operational in the first quarter, but was postponed to July due to delays in construction.
Traders, however, are doubtful that the unit will be able to start operations by August.
This offer came at a time when supply of LSFO is high due to lower-than-expected demand from Japan. Demand was expected to peak during the summer as most of its nuclear reactors remained idle.
However, some traders said that Japan’s power generation needs could pick up in August when the temperature turns warmer.