Traders said March cargoes of heavy sweet Indonesian Minas crude have started trading at firm premiums of 40 cents per barrel to the Indonesian Crude Price (ICP).

For February, Minas had started trading only at 22 cents over the ICP, although premiums did rise to a high of 39 cents.

Minas is considered a replacement crude for Daqing. It is also a benchmark crude for heavy sweet Asian grades.

Prior to the Daqing news, traders had expected March Minas to start trading at premiums in the low 30s. March is traditionally a period of weak seasonal demand.

There were also expectations earlier that Chinese demand, which had driven the regional crude prices up in January and February, would start to taper off in March.

But industry sources in China said on Monday that there would not be any volumes of Daqing allocated to Japan forFebruary, fuelling a surge in bids in the Asian crude market.

Apart from Minas, traders said March Widuri was also sold at a premium of 75 cents to the ICP, compared to initial February Widuri deals at ICP +36.

Traders said sellers of March Minas were now offering at premiums of 50/60 cents. Early on Monday, the offers were only around 30/40 cents.

Daqing is a heavy sweet crude, similar in quality to Minas, Widuri or Cinta crudes from Indonesia.

But traders said although the Daqing news has pushed buyers bids up, the current buying interest was from buyers outside Japan.

They said many Japanese buyers have not actually started to buy alternative crudes to cover the Daqing shortfall, as there were still hopes that China may concede to supply part of the contractual volumes.

The current surge in demand was probably coming from traders forecasting a continued rise in the Asian crude premiums and sellers marking their prices higher off the back of the Daqing news, traders said.

The loss of Daqingsupply to Japan would nevertheless create more demand for its replacement crudes, traders said.

Traders said the Japanese lifters had written to China asking that it lives up to an existing agreement to supply Daqing, and had requested that China reply by Monday.

They said they were still waiting for a reply from China.