Major Asian refiners sell 2026 diesel cargoes at higher premiums
Major Asian refiners have locked in term deals for diesel exports in 2026 at higher premiums to benchmark Singapore prices than this year, several trade sources said, supported by firmer prices in November.
Spot premiums for refiners' sales of December 10-ppm sulfur diesel were at two-year highs as prompt supplies tightened due to higher-than-expected refinery outages while year-end demand from regional importers rose, traders said.
Higher premiums for 2026 supply indicate that some traders remain bullish about the outlook for the motor and industrial fuel next year.
Taiwanese refiner Formosa Petrochemical Corp. (FPCC) sold two 750,000-bbl cargoes per month of 10-ppm sulfur diesel to one Western trading house at premiums of $0.60–$0.70 a barrel, three sources familiar with the matter said.
Another two buyers have the option to load one 750,000-bbl cargo every quarter at premiums of up to $0.80 per barrel, they added.
These levels were up compared with this year's contract prices at premiums of $0.20–$0.40 per barrel.
"The market's term premiums for diesel and jet fuel are mostly up year on year due to stronger supply-demand forecasts next year," said FPCC's spokesperson KY Lin, although he declined to comment on the deals.
"We are expecting global supply-demand fundamentals for most oil products including diesel and jet fuel to be better compared with this year, given some refinery shutdowns and closures since the second quarter of this year," he added.
Several refineries in Asia suffered longer-than-expected outages, while some on the U.S. West Coast have shut permanently due to high costs.
Meanwhile, South Korean oil majors SK Energy, a unit of SK Innovation, and GS Caltex have sold several 10-ppm sulfur diesel cargoes per month to a handful of Western trading houses and regional end users at premiums averaging $0.30 per barrel, compared with around parity to $0.20 premiums this year.
SK Energy and GS Caltex did not immediately respond to requests for comment.
Japan-origin barrels were also discussed at premiums of $0.30–$0.50 per barrel, two trade sources said, though further details could not be confirmed.
For jet fuel or kerosene, both FPCC and GS Caltex have been termed out at premiums of $0.80–$1 a barrel to FOB Singapore quotes, as several buyers also took the chance to lock in their supplies as they expect stronger heating demand until early next year, traders said.
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