Asia Octane: Key market indicators for Nov 15-19

Asian gasoline retreated due to expectations of healthy supply from China, which may cap interest in blendstocks in this trading week Nov. 15-19.

Spot buying activity had tapered off for isomer-MX and toluene due to seasonality and the completion of purchasing for the year for many.

ICE January Brent crude futures was assessed at $82.40/b at the Asian close Nov. 12, down 43 cents/b from $84.83/b in the previous trading session.

Naphtha

** Asian naphtha activity for first-half January delivery into North Asia was due to begin this week as the trading cycle rolls forward on Nov. 16.

** Demand for naphtha as a steam cracker feedstock was supported as the key CFR Northeast Asia ethylene and C+F Japan naphtha spread remained above the typical breakeven level of $300-$350/mt for non-integrated producers, keeping operating levels at near full, or full capacity, market sources said. Platts assessed the spread at $381.125/mt at the Nov. 12 Asian close.

** The key PX CFR Taiwan/China marker and the C+F Japan naphtha cargo spread widened $3.045/mt on the week to $144.295/mt on Nov. 12, Platts data showed. This was still below the typical breakeven of around $280-$300/mt, leading splitters to keep run rates low, sources said.

** Gains in naphtha outpaced that of gasoline as the reforming spread -- the difference between Singapore 92 RON gasoline and Singapore naphtha derivative -- narrowed 87 cents/b day on day to $6.28/b Nov. 12, Platts data showed. The narrowed reforming spread is likely to weigh on naphtha demand as a gasoline blendstock.

MTBE

**Asian MTBE is slated to see a volatile week from fluctuations in gasoline and the overall crude complex amid thin spot activity this week, as the market focuses on 2022 annual term negotiations.

**Reopening of countries from travel restrictions are likely to improve gasoline blending demand in Southeast Asia. However, China's MTBE demand remained thin amid reduced gasoline blending activity, lower refinery runs and reduced crude import quotas.

**Rising Asian supply is likely to add to oversupply concerns. South Korean refiner Hyundai Oilbank plans to start up a new 200,000 mt/year MTBE plant in Daesan by year-end.

Toluene

** Asian toluene markers are likely to soften this week as buyers have stocked up and purchased up through to the end of the year, sources said. Regional toluene prices fell from poor demand across market segments.

**Chinese domestic prices have led the decline as gasoline blenders have fully covered their requirements. Prompt prices traded at a high of Yuan 7,000/mt (around $943.06/mt) late October and were heard dropping to a low of Yuan 6,325/mt ($850.81) after the Asian trading day Nov. 12, sources said.

**India buying has slowed after purchasing for the festive season, with port congestions and shipment delays continuing to plague trades. Southeast Asia term negotiations have also been delayed due to high freight costs that are hampering usual movements.

Isomer-MX

** Demand for Asian isomer-MX is at a seasonal low, while China's gasoline blending demand is likely to remain sluggish.

** The decline in MX saw its spread to naphtha hit its lowest on record Nov. 10 at $12.25/mt and ended the week at $13.13/mt Nov. 12, Platts data showed.

** The Isomer-MX spread to paraxylene widened $35.67/mt week on week to $106.17/mt Nov 12, as PX rose $15.67/mt over the period to $923.17/mt CFR Taiwan/China.

Ethanol

** In the Philippines, gasoline demand had recovered to around 80% of pre-COVID-19 levels amid a relaxation of restrictions. Oil companies have started to book Q1 resupply into the country after an uninspiring Q4.

** Buying interest was reported for February and March delivery in the country though volume was below 10,000 c u m.

** US ethanol delivered to the Philippines climbed to $851.67/cu m Nov. 12 from $818.67/cu m Nov. 5.