Malaysia’s Prime Minister Muhyiddin Yassin on June 7 announced restrictions would be further eased over June 10-August 31 to enable the restart of nearly all social, economic and religious activities, as long as strict social distancing measures are adhered to. All interstate travel is now permitted except to areas where strict lockdowns remain in force due to infection clusters, and schools, businesses, local tourism and recreational activities can gradually restart.
Driving activity across Malaysia started to pick up from mid-May after an earlier conditional easing of the country’s interstate travel ban in early May, according to Apple mobility data.
Demand for road vehicle fuels plunged after the country imposed the initial lockdown in mid-March. Domestic passenger vehicle sales also tumbled, sliding more than 99% to just 131 in April from 45,302 the year before, Malaysian Automotive Association data showed. Sales of commercial vehicles totaled 10 in the month, down from 4,633 in April 2019.
“The MCO [Movement Control Order] in early May did raise demand but movement was quite limited; it was more to allow businesses to open up. After June 9 however, we expect to see a real jump in gasoline demand,” a Malaysia-based source said.
The main factor supporting the rise in demand for road fuels was the lifting on the ban on interstate travel, traders said. “Driving is the main way of travel around Malaysia, both for business and holidays,” a market participant said.
A third source said: “I don’t think domestic air travel [in Malaysia] will pick up as fast as driving; driving will recover first. Post COVID-19, people would rather travel in personal vehicles.”
Reflecting the expectations of returning demand in Malaysia, the FOB Singapore 95 RON gasoline crack against front-month ICE Brent crude futures was assessed at $5.15/b June 10, the highest since March 12, when it was assessed at $6.79/b, S&P Global Platts data showed. It was the 23rd consecutive trading session the higher-octane gasoline crack remained in positive territory.
“Malaysia takes in a lot of 95 RON gasoline. If Malaysia demand recovers, you will see the impact here [on 95 RON gasoline] first,” the third source said.
In contrast, the FOB Singapore 92 RON gasoline crack against front-month ICE Brent crude futures did not return to positive territory until June 3 and was assessed at $2.48/b on June 10, Platts data showed.
On the gasoil front, the price of Asian benchmark ultra low sulfur diesel has also been trending higher as demand firms while regional refinery run cuts and scheduled turnarounds tighten supply.
The cash differential for 10 ppm sulfur gasoil loading from Singapore rose 4 cents/b day on day to a premium of 57 cents/b to the Mean of Platts Singapore gasoil assessments June 10, while the physical gasoil crack to front-month cash Dubai crude was assessed up $1.02/b over the same period at $5.83/b, a two-week high, Platts data showed.
Source: Platts
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