Signs of Asian Recovery Emerging from Vietnam

Vietnam’s returning appetite driven by motor fuel: analysis

Asia’s gasoline and gasoil markets is being lifted by demand from Vietnam, according to analysis by S&P Global Platts.

Vietnam has thus far escaped the brunt of the COVID-19 outbreak, with economic activity normalising to pre-pandemic levels a month after movement restrictions were lifted in April. According to mobility data from Apple, driving and movement in Vietnam has risen back to levels seen in February, recovering from an almost 60 percent fall in March.

The severity of the decline led to Vietnamese refinery Nghi-Son Refinery to sell around 500,000 barrels of RON 95 gasoline in March, in an attempt to offset high domestic supplies. To further cut stockpiling, state-owned oil and gas conglomerate PetroVietnam proposed in April to curb the import of oil products to help local refineries, citing that “stockpiles of gasoline rose to more than 90 percent of storage capacity.”

The Vietnamese government subsequently rejected the proposal in mid-May, deeming it ‘unfeasible’, local media reported.

Region to Benefit from Vietnamese Demand

The uptick in Vietnamese demand comes at an opportune time for the Asian gasoline market, which is also struggling from overcapacity.

“Traders in the region [Asia] are holding to supply. There is a slight contango, but now it is more feasible to shift cargoes out of tanks, if the price is good,” one Singapore-based market source said.

In addition, June will be the start of heavy turnaround at South Korean refiners, with big players SK-Energy and S-Oil taking units offline for scheduled maintenance.

Vietnam normally buys from South Korea due to bilateral tax incentives, but if spot volume from Vietnam grows, they may opt to buy from non-Korean sellers. Vietnam’s Petrolimex and PV Oil have thus far sought a total of at least 1,643 million barrels of gasoline for late-May and early June delivery, in contrast to none in April, according to S&P Global Platts.