Asia Light Ends: Key Market Indicators For Jan 17-21

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Asia’s light ends were supported in early trade Jan. 17 by firmer crude oil futures, though gasoline demand was not yet in full swing even as fresh supply was seen from India and Malaysia, while naphtha demand remained limited by low olefin and aromatics margins.

Any recovery in propane demand from China’s propane dehydrogenation plants for the end of winter could be curtailed by the start of the long holiday season at end January.

Front-month March ICE Brent crude futures stood at $86.10/b at 0446 GMT Jan. 17, up from $84.95/b at the 0430 GMT Asian close Jan. 14,  says an article published in Platts.

Gasoline

The February FOB Singapore 92 RON gasoline swap rose in early Jan. 17 trade to be pegged notionally higher at $96.06/b at 0200 GMT, up 1.38% from the previous session, S&P Global Platts data showed.

The US RBOB-Brent crack fell 1.11% from the previous session to $15.53/b in early Jan. 17 trade.

US product supplied, or implied demand, of finished motor gasoline fell 3.3% to 7.906 million b/d in the week to Jan. 7, Energy Information Administration data released Jan. 12 showed, the lowest since the week ended Feb. 19, 2021.

A fire Jan. 15 at Kuwait National Petroleum Co.’s Mina al-Ahmadi oil refinery during maintenance work has had no impact on refinery operations as the unit was already out of service, market sources said.

Waning motor fuel demand recovery in Asia was reflected in Singapore’s light distillate stocks rising 4.52% week on week to a four-month high of 13.625 million barrels in the week ended Jan. 12, Enterprise Singapore data released late Jan. 13 showed. The city-state’s net gasoline exports slumped to a five-week low of 114,588 mt Jan. 6-12 as exports to Australia fell 58.7% to 41,736 mt and to Malaysia fell 56.96% to 46,993 mt.

More regional supply was reflected in sale tenders, with India’s Hindustan Petroleum Corp. Ltd. offering 10,000 mt of minimum 83 RON gasoline for Jan. 28-30 loading from New Pirpau Jetty, or NPPJ/Second Chemical Berth, or SCB Mumbai Port, west coast India, in a tender closing Jan. 18. Malaysia’s Hengyuan Refining Company was also offering three 12,000 mt spot cargoes of 91 RON catalytic cracked gasoline for loading from Port Dickson over Feb. 1-3, Feb. 5-11, and Feb. 12-18 in a tender that closes Jan. 17 with same-day validity, market sources said.

Naphtha

The physical C+F Japan naphtha marker rose $3/mt from the previous Asian session to $777.75/mt in mid-morning trade Jan. 17 on higher crude oil futures.

However swap market sentiment was weaker mid-morning Jan. 17, with brokers pegging the front month February-March Mean of Platts Japan naphtha swap time spread down 50 cents/mt from the previous close at $10.25/mt.

Buying activity for first-half March delivery into North Asia was slated to kick off this week as the trading cycle rolled forward .

Slim olefin and aromatics margins dampened demand from petrochemical makers and led to a fall in cash differentials. The cash differential for spot minimum 65% paraffinic naphtha parcels was assessed down $3.25/mt week on week at $8/mt Jan. 14 against the MOPJ naphtha physical on a CFR Japan basis, Platts data showed.

The CFR Northeast Asia ethylene to C+F Japan naphtha spread narrowed $56.125/mt week on week to $175.25/mt at the Asian close Jan. 14, Platts data showed. The spread was well below the breakeven level for non-integrated producers of $350/mt and was likely to prompt more steam cracker operators to reduce run rates, with at least one steam cracker in Asia slashing rates in January, Platts reported.

LPG

Front month February propane CP swaps were indicated at $742/mt Jan. 17, down from $746/mt the previous session and $2/mt above January term CP, as North Asia heating demand began to ease.

While Chinese propane dehydrogenation demand was expected to increase from spring, a seasonal three-week lull in manufacturing activity over the Lunar New Year starting Feb. 1 could see demand waning from end-January.

The February-March propane CP was pegged at a $20/mt backwardation Jan. 17 versus $20.50/mt backwardation the previous session, while March-April was indicated at a backwardation of $29/mt, versus $31/mt Jan. 14.

The February butane swap was indicated $3/mt below propane in mid-morning trade Jan. 17, steady with the previous Asian close. However, brokers said butane could flip to a small premium to propane mid-year as Asian demand for mixed cargoes, led by India, typically starts increasing from Q2.

Saudi Aramco is expected to announce acceptances of February-loading term cargoes early in the trading week starting Jan. 17, with market expectations of Saudi supply being ample early in the year.

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Source: Platts

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