Asia light ends: Key market indicators for Feb 28-Mar 4

Asia's light ends markets are set to be firmer over Feb. 28-March 4 than the week before, with naphtha supported by tightened supply due to a closed Western arbitrage, while gasoline is banking on a recovery in Southeast Asian driving activity as pandemic movement restrictions ease.

LPG is eyeing support from North Asian petrochemical sector into the second quarter.

Naphtha

** The physical C+F Japan naphtha marker rose $4/mt from the previous Asian session to $914.75/mt in mid-morning trade Feb. 28 on higher crude.

** Sentiment was lackluster in mid-morning trade Feb. 28 as brokers pegged the front-month March-April Mean of Platts Japan naphtha swap time spread down 75 cents/mt from the previous close Feb. 25 at $22/mt.

** The Asian naphtha market is expecting to see trading activity for H2 April delivery into North Asia this week as the trading cycle rolls forward March 1.

** Asian naphtha is being fundamentally supported by tight supply on the back of a closed Western arbitrage.

** The complex's strength was reflected in the CFR Japan naphtha physical crack spread against front-month ICE Brent crude futures widening $11.65/mt week on week to $148.825/mt at the Feb. 25 Asian close, S&P Global Platts data showed.

** Brokers pegged the East-West spread, the difference between front month CFR Japan and CIF Northwest Europe assessments, at minus $3/mt in mid-morning Asian trade Feb. 28, down 50 cents/mt from the European close Feb. 25. The slim East-West spread signals weak arbitrage opportunities between Europe and Asia.

Gasoline

** The March FOB Singapore 92 RON gasoline swap was pegged notionally at $111.96/b at 0300 GMT Feb. 28, up 0.46% from the previous session, Platts data showed.

This increase followed key regional economies' announcements of intentions to further loosen COVID-19 movement restrictions.

** The Asian gasoline complex is expected to strengthen this week as market sources said demand was increasing on the anticipated relaxation of movement curbs in countries such as the Philippines. Gasoline supplies are also expected to tighten as Chinese exports are set to decrease in March from February, market sources said.

** Vietnam is expected to increase its demand for gasoline amid talk of more inquiries for import cargoes for March loading.

** The Russia-Ukraine conflict was expected to lend support to the gasoline market in the coming week.

LPG

** The front-month March propane contract price swap was indicated at $865/mt Feb. 28 just ahead of Saudi Aramco's scheduled announcement of March term CPs, up from $858/mt on Feb. 25. The March CP swap is $90/mt above the February term CP; this would typically point to a second consecutive month of increase in the term CPs.

** The April CP swap was pegged Feb. 28 at $850/mt, up from $836/mt Feb. 25, and April-May CP propane swap backwardation was indicated at $40/mt, compared with $44/mt Feb. 25.

** The March CP propane swap was pegged $15/mt below butane Feb. 28, from $20 the previous session, amid uncertainty over Indian and Indonesian demand for

mixed cargoes and after offers into recent purchase tenders were not forthcoming. The market is still awaiting the result of Bharat Petroleum Corp. Ltd.'s tender for three 45,000 mt evenly split LPG cargoes for H1 March delivery that was due to be awarded Feb. 25 for price cues.

** The market expects North Asian petrochemical demand for LPG feedstock to continue improving into the start of Q2 after a slow start to the year.