Asia octane: Key market indicators for March 21-25

Demand for Asian gasoline is expected to increase over March 21-25 as more regional economies ease COVID-19 restrictions and ahead of the Muslim fasting month of Ramadan.

However, demand for gasoline blending was reportedly low as margins remained poor, market sources said. The reforming spread, on the other hand, has been widening, which could improve blending economics going forward.

Nevertheless, Japan's appetite for gasoline blending components is expected to decline in the short term as the March 16 earthquake that rocked offshore Fukushima has hindered blending operations, market sources said.

At 0258 GMT March 21, May ICE Brent crude oil futures contract was up by more than 2.67% from the previous Asian close on March 18 at $111.08/b, data from S&P Global Commodity Insights showed.

Naphtha

** Asian naphtha demand recovery was supported by improving reforming spreads and olefin margins, but downstream weakness continued to weigh on the complex.

** Blendstock demand for naphtha was likely to improve as the reforming spread -- the difference between Singapore 92 RON gasoline and Singapore naphtha derivative -- widened 11.43% day on day to $19.45/b at the Asian close March 18, S&P Global data showed.

** Naphtha steam cracker demand gained traction amid recovering olefin margins. The key CFR Northeast Asia ethylene and C+F Japan naphtha spread widened $70.625/mt week on week to $401/mt at the Asian close March 18, above the typical breakeven level for non-integrated producers of $350/mt, S&P Global data showed.

** Downstream weakness was evident in the aromatics sector as the key CFR Taiwan/China paraxylene to C+F Japan naphtha cargo spread remained below the typical breakeven level of $280-$300/mt. The spread narrowed $13.045/mt week on week to $224/mt at the March 18 Asian close.

MTBE

** Asian MTBE prices are expected to be volatile this week, due to fluctuating energy values amid the Russia-Ukraine crisis. However, the MTBE FOB Singapore marker has been stable since March 18, after hitting the all-time high of $1,345/mt on March 7, S&P Global data showed.

** Several MTBE producers were heard considering cutting run rates due to high feedstock costs. South Korean MTBE producer, Hyundai Oilbank, was heard to have reduced its new Daesan MTBE plant run rate to 70%.

** South Korea halted exporting MTBE to Russia after the latter's invasion of Ukraine. South Korea exported two MTBE cargoes to Russia in November 2021 and January 2022, but none in February 2022.

Toluene

** Asian toluene prices are firming on tight spot supplies and supported by higher crude oil prices. April cargoes have mostly been placed and fewer are being sold from Korea, sources said.

** Asian toluene was assessed up $45/mt day on day at $1,020/mt FOB Korea and up $45/mt at $1,050/mt CFR China March 18, S&P Global data showed.

** Port inventory in east China was down 4,200 mt at 36,800 mt, from 41,000 mt ex-tank, a week ago, while in the south, stocks were low at 15,000 mt.

** India was closed March 18 for the Holi festival so there fewer firm bids, but demand remains strong, sources said.

Isomer-MX

** April cargoes remain tight given upstream volatility recently and the earthquake in Japan affecting MX supply-demand balance.

** Isomer-MX market participants remain uncertain and continue to track upstream and paraxylene prices, looking to stabilize PX-MX and MX over feedstock naphtha margins. Current PX-MX margins have been hovering at around $110/mt, while MX margins over feedstock naphtha are hovering around $120-$140/mt, S&P Global data showed.

Ethanol

** Gasoline prices at the pumps in Philippines touched Peso 80/liter at the week ended March 18, climbing from Pesos 72/liter at the end of the week before, a situation deemed worrying for gasoline and fuel ethanol consumption, sources said.

** Buyers in the Philippines, having covered until June delivery, had stood on the sidelines during the week ended March 18 with offers in the Philippines steady at around $780/cu m CFR Philippines, S&P Global data showed.

** US ethanol delivered to the Philippines slipped to $743/cu m on March 18 from $754/cu m on March 11, S&P Global data showed, as corn values sank on prospects of peace between Russia and Ukraine.