ASIA LIGHT ENDS: Key Market Indicators July 18-22


The light ends markets in Asia had a mixed start to the week of July 18–22 as reported by S&P Global.

While gasoline is being held back by slower demand in Indonesia, where imports are anticipated to fall by roughly a third in July as the peak demand season ends, stronger oil futures have bolstered naphtha and LPG.


** Asia’s gasoline complex is expected to soften July 18-22 as demand from Indonesia was heard to decrease post-Eid festivities, market sources said. Indonesia, one of Asia’s largest buyers of gasoline, was expected to import 9 million barrels of the motor fuel in July, down from an estimated 13 million barrels in June, market sources said.

** Brokers pegged the front-month FOB Singapore 92 RON gasoline crack against the Brent swap at $10.70-$10.75/b at 0300 GMT on July 18, widening from $10.32/b at the Asian close of July. 15, but still below the July 12-15 average of $12.82/b, S&P Global Commodity Insights data showed.

** Asian cracks were tracking a weakening US RBOB-Brent crack, which was down 98 cents/b at 0300 GMT July 18 from the last Asian close at $32.98/b, S&P Global data showed. The fall in the RBOB-Brent crack came after US gasoline stocks rose 5.825 million barrels to a more than two-month high of 224.937 million barrels in the week ended July. 8, Energy Information Administration data released July 13 showed.


** The physical C+F Japan naphtha marker rose $6.75/mt from the previous Asian close to $758.50/mt in midmorning Asia trade on July 18 on a sharp increase in crude futures.

** While the paper market structure held in backwardation, a stable-to-softer sentiment was observed early July 18, as brokers pegged the front-month July-August Mean of Platts Japan naphtha swap time spread at $5.75/mt, widening 25 cents/mt from the Asian close July 15, S&P Global data showed. It was at $7.50/mt on July 14.

** Poor downstream margins, likely to be exacerbated by China’s new lockdown policies, continued to weigh on demand for naphtha.

** The spread between CFR Northeast Asia ethylene and CFR Japan naphtha physical was at $108.25/mt at the Asian close on July 15. It has been below the minimum breakeven level for integrated producers to make ethylene from naphtha at $250/mt since May 13, S&P Global data showed.

** Supply of naphtha in Asia remains long, with suppliers expected to offer due to refiners running at high rates on profit margins for transport fuels, market sources said.


** Saudi Aramco August contract price propane swaps were indicated at $672/mt July 18, up from $668/mt July 15, but $53/mt below the July term CPs.

** The August butane CP swap was indicated at $10/mt below propane, versus $8/mt below propane in the previous session.

** Butane’s steepening discount to propane reflected persistently dull Asian demand for butane, while mixed-cargo supply from the Middle East and the US has stayed healthy, traders said. There were no disruptions to Middle Eastern term supply and spot cargoes are being offered occasionally.

** Aramco has announced acceptances of August-loading term cargoes in line with lifters’ nominations.

“Confirmed that Saudi acceptance was out yesterday [July 17],” a North Asian lifter said. “So far, I did not hear any cuts, delays or advanced loadings. I think it was as usual.”

** Chinese propane demand from propane dehydrogenation plants remains pressured by poor margins, which has dampened the appetite for polypropylene. This has led Fujian Zhongjing Petrochemical Co., a unit of China Flexible Packing Group, which uses feedstock from a PDH plant owned by Fujian Meide, to again delay the start of its new 1.2 million mt/year PP plant in Jiangyin to September from July. But ahead of the commissioning of its 600,000 mt/year PDH plant around end-September, Liaoning Kingfa Science & Technology Co. Ltd. bought 23,000 mt propane for delivery ex-ship to Panjn Aug. 16-Sept. 5 at plus $5/mt to Argus Far East Index. Traders said the parcel would be used for test-running the new unit.


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Source: S&P Global 


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