News Summary Core Viewpoint - The automotive and fuel markets are experiencing mixed trends, with a slight decline in passenger vehicle sales in China, new fuel taxes in Singapore, and varied fuel sales in India, while the fuel oil market faces supply and demand challenges. Group 1: Automotive Market - In October, the wholesale sales of conventional fuel passenger vehicles in China reached 1.31 million units, representing a year-on-year decline of 3% and a month-on-month increase of 1% [1] - Cumulatively, from January to October, the wholesale sales totaled 11.7 million units, down 2% compared to the previous year [1] Group 2: Fuel Tax and Sales - Starting next year, departing airline passengers from Singapore will pay up to 41.60 SGD (31.95 USD) as a green fuel tax, aimed at reducing emissions in the aviation sector [1] - In India, fuel sales in October decreased by 0.4% year-on-year to 17.017 million tons, with diesel sales down 0.3% and gasoline sales up 7.4% [1] Group 3: Fuel Oil Market - The Asian low-sulfur fuel market is facing challenges due to ample immediate supply and sluggish downstream marine fuel activity, with the closure of the East-West arbitrage window potentially reducing European arbitrage cargoes in December [2] - The Asian high-sulfur fuel oil market is supported by stable downstream demand, but supply remains sufficient, with ongoing sanctions affecting Russian and Iranian volumes [2] - Market expectations indicate that fuel oil supply is ample, which is bearish for fuel oil prices, while sanctions on Russia and reduced trade tensions between China and the U.S. could support prices [3] - Strategies suggest focusing on short-selling opportunities in the main fuel oil contracts [3]

Report Industry Investment Rating - Not provided Core Viewpoints - The high - sulfur fuel oil market structure has shown signs of stabilization, with reduced supply pressure and marginal improvement in refinery demand. However, there is still resistance above the valuation due to potential seasonal consumption decline. The low - sulfur fuel oil market has limited supply pressure, and there are long - term substitution risks, but the downside space is also limited [5]. - For high - sulfur fuel oil, the short - term outlook is neutral, and the medium - term outlook is downward. For low - sulfur fuel oil, the short - term outlook is neutral, and the medium - term outlook is downward. It is recommended to go long on the FU2511 - 2512 spread at low prices (positive spread trading) [6]. Summary by Related Catalogs Market Analysis - With the escalation of the geopolitical situation, crude oil prices rebounded this week, boosting the downstream energy sector. The fundamentals of high - sulfur fuel oil improved marginally, and the cancellation of some FU futures warehouse receipts strengthened the futures market structure. The weekly increase of the FU main contract was 4.36%, and that of the LU main contract was 1.9% [1]. Supply - **High - sulfur fuel oil**: In September, the expected shipments of high - sulfur fuel oil from Iran are 1280,000 tons, a month - on - month decrease of 50,000 tons and a year - on - year decrease of 460,000 tons; from Russia, 2.89 million tons, a month - on - month increase of 330,000 tons and a year - on - year decrease of 70,000 tons; from the Middle East, 2.5 million tons, a month - on - month decrease of 1.26 million tons and a year - on - year decrease of 1.12 million tons [2]. - **Low - sulfur fuel oil**: In September, the expected shipments of low - sulfur fuel oil from Nigeria are 530,000 tons, a month - on - month increase of 220,000 tons and a year - on - year increase of 530,000 tons; from Kuwait, 240,000 tons, a month - on - month decrease of 130,000 tons and a year - on - year decrease of 150,000 tons. Brazilian exports decreased significantly in September. In August, the domestic production of low - sulfur fuel oil for bonded use in Chinese refineries was 1.065 million tons, a month - on - month increase of 46,000 tons or 4.51%. Overall, the supply pressure of low - sulfur fuel oil is still limited [2]. Demand - Although the impact of US tariffs on shipping demand has not been fully reflected, there is still downward pressure on trade and shipping demand in the medium term. High - sulfur fuel oil demand in the marine fuel sector is more resilient, but the summer power generation demand has not exceeded the seasonal level. The demand for low - sulfur fuel oil in the marine fuel sector is average, and its market share is being gradually replaced [3]. Inventory - This week, the fuel oil inventory in Singapore was 22.804 million barrels, a week - on - week decrease of 10.26%; the fuel oil inventory in Zhoushan Port was 1.19 million tons, a week - on - week increase of 10.19% [4]. Strategy - **High - sulfur fuel oil**: Short - term neutral, medium - term downward. - **Low - sulfur fuel oil**: Short - term neutral, medium - term downward. - **Cross - variety**: None. - **Cross - period**: Go long on the FU2511 - 2512 spread at low prices (positive spread trading). - **Spot - futures**: None. - **Options**: None [6]

Group 1: Report Industry Investment Rating - Not mentioned Group 2: Core Viewpoints of the Report - This week, the high - sulfur cracking margin declined slightly, the 380 - cst near - end ran strongly, the monthly spread oscillated at a high level, and the basis strengthened again. The low - sulfur cracking margin oscillated, the near - end monthly spread oscillated, and the basis weakened. Recently, the low - sulfur valuation has been realized, and there is room for the cracking margin and the monthly spread to decline after the supply recovers. The high - sulfur cracking margin runs strongly, with profits higher than the historical average. This year, affected by consumption tax deduction and tariff adjustment in China, the refinery feed demand for fuel oil has dropped significantly. In the shipping fuel sector, the global high - sulfur shipping fuel from January to March increased by 2% year - on - year, and that in Singapore was basically flat, while the total shipping fuel was weaker year - on - year. Recently, the net import of Saudi Arabian residue has rebounded, and Egypt's purchases continue, so the high - sulfur near - end remains strong. Pay attention to the medium - and long - term opportunity for the high - sulfur cracking margin to decline [3][4] Group 3: Key Data Summaries Rotterdam Fuel Oil | Product | 2025/05/27 | 2025/06/03 | Change | | --- | --- | --- | --- | | 3.5% HSF O Swap M1 | 398.15 | 397.26 | -0.89 | | 0.5% VLS FO Swap M1 | 442.03 | 449.90 | 7.87 | | HSFO - Brent M1 | -0.39 | -2.56 | -2.17 | | 10ppm Gasoil Swap M1 | 581.80 | 599.32 | 17.52 | | VLSFO - Gasoil M1 | -139.77 | -149.42 | -9.65 | | LGO - Brent M1 | 16.18 | 16.85 | 0.67 | | VLSFO - HSFO M1 | 43.88 | 52.64 | 8.76 | [1] Singapore Fuel Oil | Product | 2025/05/27 | 2025/06/03 | Change | | --- | --- | --- | --- | | 380cst M1 | 416.86 | 404.63 | -12.23 | | 180cst M1 | 423.87 | 411.53 | -12.34 | | VLSFO M1 | 481.97 | 475.64 | -6.33 | | Gasoil M1 | 78.88 | 79.52 | 0.64 | | 380cst - Brent M1 | 1.49 | -0.48 | -1.97 | | VLSFO - Gasoil M1 | -101.74 | -112.81 | -11.07 | [1] Singapore Fuel Oil Spot | Product | 2025/05/27 | 2025/06/03 | Change | | --- | --- | --- | --- | | FOB 380cst | 420.21 | 422.45 | 2.24 | | FOB VLSFO | 488.92 | 486.45 | -2.47 | | 380 Basis | 5.50 | 5.50 | 0 | | High - sulfur Domestic - Foreign Spread | 10.1 | 4.9 | -5.2 | | Low - sulfur Domestic - Foreign Spread | 11.9 | 16.7 | 4.8 | [2] Domestic FU | Product | 2025/05/27 | 2025/06/03 | Change | | --- | --- | --- | --- | | FU 01 | 2676 | 2705 | 29 | | FU 05 | 2611 | 2642 | 31 | | FU 09 | 2819 | 2828 | 9 | | FU 01 - 05 | 65 | 63 | -2 | | FU 05 - 09 | -208 | -186 | 22 | | FU 09 - 01 | 143 | 123 | -20 | [2] Domestic LU | Product | 2025/05/27 | 2025/06/03 | Change | | --- | --- | --- | --- | | LU 01 | 3344 | 3333 | -11 | | LU 05 | 3282 | 3286 | 4 | | LU 09 | 3415 | 3425 | 10 | | LU 01 - 05 | 62 | 47 | -15 | | LU 05 - 09 | -133 | -139 | -6 | | LU 09 - 01 | 71 | 92 | 21 | [3]