Asia Light Ends: Key Market Indicators For Jan 31-Feb 4

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Asia’s light ends markets firmed in mid-morning trade Jan. 31 on stronger crude oil futures, although gasoline market participants were wary of softening demand in India but optimistically cautious that the omicron outbreak had peaked in Australia, says an article published in Platts.

Market activity slow

Market activity is expected to be slowed by this week by Lunar New Year festivities starting Feb. 1 Naphtha is seeing improving market sentiment, while LPG awaits the release of Saudi Aramco’s February term Contract Prices.

Front-month March ICE Brent crude futures stood at $91.06/b at 0350 GMT Jan. 31, up from $89.95/b at the Asian close Jan. 28.

Gasoline

The February FOB Singapore 92 RON gasoline swap rose in early Jan. 31 trade, pegged notionally higher at $101.49/b at 0200 GMT, up 0.57% from the previous session, S&P Global Platts data showed.

US product supplied, or implied demand, of finished motor gasoline rose 280,000 b/d to 8.51 million b/d in the week ended Jan. 21, US Energy Information Administration data showed.

The impact of the omicron variant on motor fuel demand would persist momentarily in Australia as the wave of infections appears to have peaked in the country, market participants said.

Vietnam’s Saigon Petro has reissued a spot tender seeking a combined 10,000 mt each of gasoil and 95 RON gasoline for February loading and delivery, which the company said was “due to too few offers at too high prices”.

More supply from India surfaced this week, indicating that domestic gasoline demand was weakening from December levels. India’s driving activity averaged 132.29% above baseline levels in December and eased to 76.41% above baseline levels over Jan. 1-28, Apple mobility data showed.

State-run Hindustan Petroleum Corp. Ltd. was offering 10,000 mt of minimum 83 RON gasoline for February loading, while Indian Oil Corp. was offering 9,500-15,000 mt of high sulfur gasoline for February loading.

Naphtha

The physical C+F Japan naphtha marker rose $13.125/mt from the previous Asian session to $818.875/mt in mid-morning trade Jan. 31 on higher crude.

Sentiment was stronger in mid-morning trade as brokers pegged the front-month February-March Mean of Platts Japan naphtha swap time spread up 75 cents/mt from the previous close at $13/mt, Platts data showed.

Asian naphtha firmed in line with the European market strength, which capped supply due to a closed arbitrage, despite tepid Asian demand from turnaround season and the use of LPG as an alternative feedstock.

Asia’s naphtha market is expecting to see buying activity for H2 March delivery into North Asia begin this week as the trading cycle rolls forward Feb. 1. However, market activity is likely to be thin over Lunar New Year.

The cash differential for spot min 65% paraffinic naphtha was assessed at $11.75/mt Jan. 28, up $3.25/mt week on week, against MOPJ naphtha physical on a CFR Japan basis, Platts data showed.

Olefin and aromatics markets gained traction as key margins widened in the week, despite still remaining below breakeven levels.

The key CFR Northeast Asia ethylene to C+F Japan naphtha spread widened $46.75/mt week on week to $194.25/mt at the Asian close Jan. 28, Platts data showed. The spread remains below typical breakeven levels for non-integrated producers of $350/mt and has forced steam crackers to reduce run rates.

LPG

Just ahead of Saudi Aramco’s announcement of February Contract Prices, front-month February propane CP swaps traded Jan. 31 at $780/mt and were $40/mt above the January CP.

March-April backwardation was valued at $42/mt Jan. 31, versus $40/mt the previous session.

In their second round recommendations, Asian terms placed February propane CP at $750-$780/mt and butane at $745-$790/mt.

The spread between propane and between has been fluctuating in the past week between plus $5/mt and parity amid concerns over Saudi butane supply, countered by a pause in Indian spot demand until March.

Trading activity is expected to be thin during the Lunar New Year holidays. While the recent emergence of spot tenders signals that Chinese propane dehydrogenation plant operators are poised for higher operating rates after some return from turnaround and the long holidays, there were concerns that some tenders were not awarded, trade sources said.

Recent discounts of LPG against naphtha are expected to continue Asian steam crackers’ interest in propane or butane if they are not down for maintenance or running at low rates, trade sources said.

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Source: Platts

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