Asia Light Ends: Key Market Indicators For Dec 20-24

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Asia’s light end markets opened the trading week starting Dec. 20 weighed down by the decline in crude values following an increase in coronavirus cases globally and country lockdown measures, says an article published in Platts.

Gasoline was pressured by the potential impact on transportation fuel demand, which has in turn affected LPG demand as a motor fuel.

Asian naphtha was seeing bearish signs from the downstream sector due to shrinking margins.

Front month February ICE Brent crude futures stood at $71.64/mt at 0409 GMT Dec. 20, down from $74.43/b at the 0830 GMT Asian close Dec. 17.

Gasoline

January FOB Singapore 92 RON gasoline swap fell at the start of the week, pegged lower at around $82.26/b early Dec. 20, down 3% from the previous session, Platts data showed.

The US RBOB-Brent crack stood at $15.83/b 0200 GMT Dec. 20, down 1.89% from the previous session. The crack had gained for three consecutive sessions prior to this morning’s dip.

Market participants cautious as fundamentals remain uncertain; looking forward to Pertamina’s tender results, slated to be released later Dec. 20, for pricing cues.

Sentiment dampened by fresh reports on COVID-19 omicron variant, which highlighted ineffectiveness of multiple vaccinations used globally against the variant.

More cargoes spotted heading to end-users from regional hubs, such as MR tanker HSL Anna placed on subject to load gasoline from South Korea end-December to Australia.

Naphtha

The physical C+F Japan naphtha marker dipped $23.25/mt from the previous Asian session to $683.75/mt in mid-morning trade Dec. 20 on lower crude.

Stable sentiment reflected in naphtha swaps; brokers pegged front-month January-February Mean of Platts Japan naphtha swap time spread at $11.75/mt mid-morning Dec. 20, unchanged from the previous close, Platts data showed.

Demand for naphtha as a steam cracker feedstock is expected to remain weak as key CFR Northeast Asia ethylene and C+F Japan naphtha spread narrowed $5.50/mt day on day and $8.875/mt week on week to $348/mt at the Asian close Dec. 17, Platts data showed. This was below the typical breakeven level for non-integrated producers of $350/mt and could prompt some steam crackers to reduce run rates, sources said.

Downstream weakness was evident as key PX CFR Taiwan/China marker and the C+F Japan naphtha cargo spread remained below typical breakeven level of around $280-$300/mt, stood at $129.33/mt at Dec. 17 Asian close, which is likely to keep run rates in splitters low, sources said.

Naphtha blendstock demand seen stable as reforming spread — the difference between Singapore 92 RON gasoline and Singapore naphtha derivative — widened 30 cents/b day on day to $8.10/b at Dec. 17 close, Platts data showed. The widened spread makes it economically viable for gasoline producers to use naphtha as a blendstock.

LPG

Front-month January propane CP swaps indicated at $700/mt Dec. 20, down $9.50/mt from previous session amid a fall in crude futures.

While there was weaker sentiment in the wider economy on the back of fresh coronavirus cases and lockdowns, front-month January-February CP propane swap time spread bucked the trend and edged up slightly, as brokers pegged the backwardation at $31/mt, up $1/mt from the previous session. However, further down the curve the February-March CP propane swap spread was at $30/mt, down $5/mt from the previous session, Platts data showed.

CFR North Asia butane was $33/mt below propane in mid morning trade Dec. 20, down $4/mt from the previous Asian close, and this was a third consecutive day decline spurred by demand for butane as a steam cracker feedstock, a trade source said.

Key VLGC Persian Gulf to Japan freight was firm, supported by fresh activity as January acceptances of various Middle East producers were announced last week. This has driven LPG freight out of the Middle East region to 11-month highs, and begun to attract the interest of ships positioned in the West, a shipping source said.

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Source: Platts

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