- Asia’s light ends markets started the June 20-24 trading week with LPG and naphtha dampened by softer crude futures.
- There are concerns that regional LPG demand would fall short of abundant Middle East supply.
- But gasoline is poised to get support from summer driving demand and tight supply from Malaysia.
A recent news article published in the Platts talks about ASIA LIGHT ENDS: Key market indicators for June 20-24.
** Asia’s gasoline complex is expected to get support from summer-driving demand, as this sparks more demand for higher-octane grades.
** Supply-side tightness was also heard, as Malaysia’s Melaka refinery’s restart was delayed from the expected mid-June date, sources said.
** The attractive Singapore reforming spread had supported the key FOB Singapore inter-Ron spread for 92 RON and 95 RON gasoline grades, which was last assessed at $6.50/b on June 17, up $1.85/b week on week, S&P Global Commodity Insights data showed.
** The reforming spread, or difference between Singapore 92 RON gasoline and the Singapore naphtha derivative, has been on an uptrend, widened from an average of $41.60/b in May to $56.43/b over June 1-15, S&P Global data showed.
** Reflecting firm market sentiment, brokers pegged the front-month FOB Singapore 92 RON gasoline crack against Brent swap at $30.15/b in mid-morning trade June 20, compared with $28.69/b in the previous session, S&P Global data showed
** Physical C+F Japan naphtha marker fell $37.50/mt from the previous Asian close to $802.375/mt in mid-morning trade June 20 due the sharp decrease in crude futures.
** The paper market reflected weaker sentiment, as brokers pegged front month July-August Mean of Platts Japan naphtha swap time spread at minus $1/mt in mid-morning June 20, lower than minus 25 cents/mt at the Asian close June 17, S&P Global data showed.
** Poor downstream margins continued to weigh on buying interest for naphtha, as the spread between CFR Northeast Asia ethylene and CFR Japan naphtha physical was at $150.13/mt at the Asian close June 17, down $61.125/mt from the previous session. It has been below the minimum $250/mt level since May 13, S&P Global data showed.
** Spot buying activity has yet to pick up for the current H1 August delivery cycle. However Taiwan’s Formosa Petrochemical Corp. and CPC Corp. emerged last week to procure term cargoes amid the bearish market.
** Naphtha supply remained long, with more suppliers expected to offer cargoes on high refinery runs, sources said.
** Saudi July CP propane swaps was indicated June 20 at $710/mt down from $737/mt valued the previous session.
** CP July butane swaps was pegged at parity to propane, unchanged versus the previous session.
** Saudi Aramco has announced acceptances of July-loading term nominations without cuts or delays, though some lifters had loading dates advanced by around a week, lifters said.
** Middle East supply is healthy following acceptances by Qatar , which were in line with nominations , and Abu Dhabi National Oil Co., which also had some loadings advanced.
** Saudi Aramco is also expected to offer big volumes of spot cargoes for July loading, following Qatar’s sale by tenders for July, as well as steady exports from Iran for June loading.
** These supply are expected to sharpen FOB discounts in the face of tepid regional demand, traders said.
** With the Saudi July-loading acceptances giving some clarity to loading, Middle East-Japan VLGC rates are expected to get some support from the moribund activity seen in recent weeks, which together with ample tonnage were pushing rates towards sub-$80s/mt level.
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