Following Vietnam's surprise offer of minimum 2.5 million barrels of light Bach Ho crude in the spot market last week, regional suppliers and end-users are bracing themselves for hefty oversupply conditions in Southeast Asia and Oceania, market participants said Wednesday. <\/p>\n
Very little was heard on first round discussions taking place at Vietnam's latest sell tender for light Bach Ho crude for loading over May-July, though many trade participants were already on their toes, carefully assessing the potential damage the Vietnamese barrels could cause to other rival regional grades. <\/p>\n
\"The market is waiting for the bombshell to be deployed ... this could [potentially] be a nuclear bomb for the Far East regional market,\" said a North Asian sweet crude trader, indicating that various regional crude sellers would have been surprised by the unusually large volume of light Bach Ho crude offered in the spot market. <\/p>\n
Last week, PetroVietnam Oil offered a large volume of light Bach Ho crude for loading over May to July in a tender that closed March 23. Bids into the tender are to remain valid until March 31. <\/p>\n
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Bach Ho, with a gravity of 39-40 API, hardly offered in the spot market in recent months, is being shown on the back of an upcoming turnaround at the country's 130,000 b\/d Dung Quat refinery, market sources said. <\/p>\n
Binh Son Refining and Petrochemical -- operator of the refinery -- plans to shut the entire plant over May-July. <\/p>\n
PV Oil has not offered light Bach Ho crude in the spot market since July. Market participants had been expecting PV Oil to sell some Bach Ho crude in the market with the scheduled turnaround, but the total volume still took many traders by surprise. <\/p>\n
\"It's a huge volume and there will be a big impact on the market,\" said a sweet crude trader based in Singapore. The market \"must digest it in one month's time.\"<\/p>\n
Very few trade deals were heard in Malaysia so far in the May trading cycle with at least four 600,000-barrel cargoes of light sweet Kimanis crude still available in the spot market, market sources said. <\/p>\n
Sentiment remained downbeat in Oceania as well, with suppliers of Australian heavy sweet crude grades struggling to clear their May-loading cargoes. <\/p>\n
Latest market talk indicated that Mitsui was still offering a 550,000-barrel cargo of Enfield crude for loading in late May, while Woodside Petroleum was said to have been offering a 550,000-barrel cargo of Vincent crude for loading in May, with little success to date. <\/p>\n
Furthermore, trade sources said BHP Billiton has yet to find a buyer for its cargo of heavy sweet Pyrenees crude for loading in the second half of May.<\/p>\n
\"It has been a very very long time since [South Korean] plants last took light Bach Ho crude as feedstock,\" said a trader with a South Korean refining company. <\/p>\n
In addition, traders also said chances are slim for the Bach Ho barrels to end up in Japan as the country's utilities prefer to take much heavier and more affordable Southeast Asian grades for direct burning and thermal power generation purposes. <\/p>\n
\"Light Bach Ho is too expensive for burning,\" said another North Asian crude trader. <\/p>\n
Many regional traders, however, pointed at Chinese end-users as the best candidate capable of absorbing the big Vietnamese spot supply. <\/p>\n
\"The best scenario would be for [a big state-run] Chinese company to take all the [available Bach Ho] supply ... for big buyers like them, what's another VLCC of crude? It's nothing,\" the first North Asian trader said. <\/p>\n
\"Otherwise, [if the Bach Ho supply falls into the hands of various trading companies,] it will be a bloodbath for regional light and medium sweet grades,\" the trader said. <\/p>\n
--Gawoon Philip Vahn, philip.vahn@spglobal.com<\/a> <\/p>\n --Deborah Lee, deborah.lee@spglobal.com<\/a> <\/p>\n --Edited by Jonathan Fox, jonathan.fox@spglobal.com<\/a> <\/p>\n <\/p>\n See the original post:<\/p>\n Asian crude traders brace for potential Southeast Asia, Oceania supply glut - Platts<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Following Vietnam's surprise offer of minimum 2.5 million barrels of light Bach Ho crude in the spot market last week, regional suppliers and end-users are bracing themselves for hefty oversupply conditions in Southeast Asia and Oceania, market participants said Wednesday. Continue reading