Asia octane: Key market indicators for Jan 24-28

Fundamentals of Asia's octane blendstocks are likely mixed in the Jan. 24-28 trading week with some possible respite from naphtha blendstock demand and the MTBE complex.

At 0400 GMT Jan. 24, ICE March Brent crude futures stood at $88.65/b, up 2.3% from the close of Asian trade on Jan. 21.

Naphtha

** The Asian naphtha market will likely be bearish this week, on the back of thin olefin and aromatics margins dampening demand. However, an uptrend in the reforming spread could support naphtha demand as a blending component among gasoline producers.

**The reforming spread widened 40 cents/b week on week to $11.80/b at the Asian close Jan. 21, Platts data showed. As gains in gasoline were stronger than naphtha, the wider spread is likely to encourage gasoline producers to use naphtha as a blendstock -- potentially boosting demand.

** The key CFR Northeast Asia ethylene and C+F Japan naphtha narrowed $27.75/mt week on week to $147.50/mt at the Asian close Jan. 21, Platts data showed. The spread has been below typical breakeven levels for non-integrated producers of $350/mt since Dec. 23, 2021.

** Weakness downstream narrowed the key paraxylene CFR Taiwan/China marker and the C+F Japan naphtha cargo spread by $7.50/mt on the day to $189.50/mt at the Asian close Jan. 21, Platts data showed. The thin spread is below typical breakeven levels of around $280-$300/mt, sources said.

MTBE

** Asian MTBE FOB Singapore marker is expected to be on an upward trajectory this week, on the back of buying interest for February-loading cargoes. However, rising supplies in South Korea and India are expected to weigh on prices.

** South Korea's MTBE monthly trade balance remained in surplus in December 2021 at around 3,338.4 mt, up from a deficit of around 588.3 mt in November 2021.

** Singapore's MTBE imports from India plunged 80% month on month to 5,234 mt in December from record high 26,540 mt in November, latest Enterprise Singapore data showed. Prior to December, Singapore's MTBE imports from India had been increasing on the back of reduced domestic gasoline blending demand after the Indian government enforced a mandate to increase the availability of E10 gasoline.

Toluene

** Asian toluene demand is expected to remain unchanged this week as participants steered from taking positions ahead of upcoming festivities.

** FOB Korea toluene trended in tandem with upstream oil market, averaging $774.20/mt in the previous week as gasoline market rebounded, compared with $740/mt in the week over Jan. 10-14.

Isomer-MX

** Overall demand for Isomer-MX looks to be stable to lower this week, as operation rates for downstream paraxylene plants in Asia remain low due to poor economics and, in the case of China, in view of the upcoming 2022 Winter Olympics.

** MX is expected to take pricing cues from paraxylene and crude oil, which look set to rise on continued tight supply.

Ethanol

** US ethanol delivered to the Philippines climbed to $651.33/cu m on Jan. 21 against $642.33/cu m on Jan 14.

** Local oil companies in the Philippines issued tenders for April-May delivery.

** Offers were heard at $660-$670/cu m CFR Philippines for February and March delivery.

** US ethanol production averaged 1.053 million b/d in the week ended Jan. 14, up 47,000 b/d week on week, the Energy Information Administration data showed Jan. 20.