Singapore cracks set to ease as Beijing approves 500 Kt of road fuels exports in May

Singapore CPP cracks are set to ease as Beijing approves 500 Kt of May road fuels product exports through G2G channels, with a separate 1.8 Mt jet program – primarily for international flights and Hong Kong – loading alongside. The bearish move is capped, however, by the G2G-only restriction and the prospect of more than 600 kbd of regional demand destruction this month.

• Beijing has approved 500 Kt of May clean product exports through G2G channels: Sinopec 280 Kt, CNPC 150 Kt, CNOOC 40 Kt, Norinco 20 Kt, Sinochem 10 Kt.
• Slightly bearish for Singapore mogas and gasoil cracks: Demand destruction may be a mitigating factor.
• A separate 1.8 Mt bonded jet program sits alongside the allocation, primarily comprised of bonded exports for international flights and flows to Hong Kong.
• The export channel remains G2G-only despite punishing domestic margins: May volumes are capped at the 2.25 Mt loading program

The Singapore CPP market is set to ease in the coming weeks, with Beijing approving 500 Kt of May clean product exports through government-to-government channels. These are allocated as follows: Sinopec 280 Kt, CNPC 150 Kt, CNOOC 40 Kt, Norinco 20 Kt, and Sinochem 10 Kt. There is no official product breakdown, but the volume tracks closely with the 450 Kt of gasoline and gasoil already flagged in next month's loading program, as per preliminary media reports. Jet/kero is excluded from this allocation and runs through a separate channel, with 1.8 Mt scheduled to load across the month. Given the upcoming weeklong holidays in the country, many of these cargoes should be loaded in the second half of May. We expect product cracks across the board to ease in response.

China-Singapore oil products arbitrage incentive ($/bbl)

Source: Argus

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