"I'm not sure what to think about the Med... There are rumours that Turkey is backing off after the sulfur spread blew out," one trader said.
"There are definitely more sellers, there's no official announcement. Let's see," he continued.
Turkey currently offers both 10 ppm ULSD and 0.1% rural diesel at its service stations, but most demand is focused on the higher sulfur grade.
The country has been edging towards adopting the lower sulfur 10 ppm, with market participants expecting the change to come in at the end of 2010.
"With Turkey, the Med reacted and [prices] went through the roof," a second trader said as the middle distillate market responded to expectations of the change.
"The Turks are not buying 0.1%, but I don't see 10 ppm balancing out the equation. If one is disappearing, the other should be picking up," he continued, with the dampening of early expectations playing a part in undermining Mediterranean ULSD values over recent days.
Given the uncertainty over the expected change, speculation that the announcement could be pushed back to later into 2011 has arisen.
"Players need time to change. We are only four months away from the start of 2011, so I can see it being pushed back to Q3 next year," a Med cargo trader said. "We have no position that far forward as a result of the uncertainty."
Platts data shows that the spread between the 10 ppm and 0.1% CIF Mediterranean cargo assessments has widened sharply from just $4.50/mt on July 13 to hit $19.75/mt on August 18.
Much of that move came as ULSD premiums recovered from single digits through early July, to climb from $8.75/mt over the front month ICE gasoil contract to peak at $28.50/mt on August 11.
Since then, the physical ULSD differential has weakened to be assessed at plus $20.75/mt on Thursday, but it remains $13.75/mt over the 0.1% Mediterranean assessment.
China Chemical Weekly: http://news.chemnet.com/en/detail-1411716.html
