Demand for Asian gasoline and its blending components is expected to strengthen over April 25-29, supported by easing COVID-19 restrictions among regional economies, market sources said.
Driving activity is slated to see a boost in Southeast Asia as Cambodia loosened incoming travel restrictions and the Philippines’ gasoline demand was reportedly supported by the upcoming presidential elections, market sources said.
Blending interest in Singapore was heard increasing amid strong regional demand, market sources said.
At 0300 GMT April 25, June ICE Brent crude oil futures slumped 3.22% from the previous Asian close on April 22 at $103.58/b, S&P Global data showed, says an article published in Platts.
Naphtha
Weakness in the downstream segment weighed on the Asian naphtha complex, increasing its attractiveness as a gasoline blendstock.
Demand for naphtha as a blendstock might receive some support from a strengthening reforming spread, which has made it economically viable for gasoline producers to use naphtha as a blendstock, sources said. The reforming spread, the difference between Singapore 92 RON gasoline and Singapore naphtha derivative, was assessed at $29.08/b at the Asian close April 22, up $6.82/b on the week and $6.58/b from the month-to-date average of $22.50/b, S&P Global Commodity Insights data showed.
Demand for naphtha as steam cracker feedstock was weighed by weak derivative downstream margins, which caused crackers to turn to LPG as an alternative feedstock to lower costs, with plans to continue running at lower rates in April and May. The polyethylene-naphtha margin remains below the typical breakeven of $450/mt, with the high density polyethylene film CFR Far East Asia to CFR Japan naphtha physical spread at $332.875/mt April 22, S&P Global data showed.
MTBE
Asian MTBE remains tight this week, but the overall mood for the next couple of months is bearish amid ample cargoes in China, sources said.
There is port congestion in east China, market sources said, but traders with long term vessel COAs may be able to ship prompt MTBE cargoes from north and south China ports.
Toluene
Asian toluene prices have been supported given short supply and relatively healthy demand from Southeast Asia and India. Prices are expected to continue strengthening this week, against other aromatics products following Taiwan CPC’s force majeure on toluene and isomer mixed xylenes cargoes in April.
Buyers who arranged vessels to load CPC’s cargoes at Kaohsiung in April have been deferred to May or June. The actual quantity is not confirmed but toluene was heard at about 13,000 mt and isomer-MX quantity was around 9,000 mt, trading sources said.
Demand for toluene as a blend stock continue to be supported with the toluene-naphtha spread widening to $162.88/mt April 22, reflecting healthy blending margins, trading sources said. The breakeven point was said to be around $100-120/mt.
Isomer-MX
Asian Isomer-grade mixed xylene prices are likely to continue to track crude oil and paraxylene in the week ending May 1.
Isomer-MX production margins widened in the week ended April 24 to its highest in about 2 1/2 years with the spread to naphtha assessed at $223.88/mt on April 22, as sellers for May and June cargoes wait to see if prices will trend higher.
Taiwan’s CPC issued a force majeure on isomer-MX cargoes loading in April due to COVID-19 cases at two plants. This is likely to lead to a shortfall of about 9,000 mt of April loading cargoes, market sources said.
June trading activity has yet to pick up momentum as bids are still focused on May loading cargoes; MX typically trades at prompt dates, market sources said.
Ethanol
Buying for Q3 delivery of ethanol cargoes has started and is expected to continue in the coming weeks.
Sharp climb in ethanol resupply economics into Asia prompted some buyers to lock in cargoes, with a market participant stating interest for Q3 and Q4 arrival cargoes
Bioethanol CIF Philippines was assessed at $833/cu m April 22 against $787/cu m on April 14 according to S&P Global data. US ethanol values advanced with production data providing support. US ethanol production averaged 947,000 b/d in the week ended April 15, down 48,000 b/d week on week, Energy Information Administration data showed April 20.
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Source: Platts
