Asia octane: Key market indicators this week

Singapore — Demand for gasoline blendstocks has been largely quiet as the Asia gasoline market fell, tracking weaker crude markers and RBOB complex.

Blendstocks MTBE and ethanol markets were likely to hold firm in the trading week March 22-26, amid tight demand-supply fundamentals, while toluene and isomer-mixed xylenes were weakening due to poor aromatics margins.

MTBE

** FOB Singapore MTBE price fell to a two-week low at $672/mt on March 19, amid weaker gasoline and crude oil markets, but the fall was limited by steady buying interest for the blendstock.

** MTBE in Southeast Asia was expected to remain balanced-to-tight, however, the MTBE balance depends on the Chinese-gasoline supplies into Singapore, according to market sources.

** Meanwhile, the volume of monthly MTBE derivatives instruments settled on the Chicago Mercantile Exchange in February totaled 5,000 mt, CME data showed. Open interest in February doubled month on month to 5,000 mt, the data showed.

NAPHTHA

** The Asian naphtha market has begun to see weaker sentiment as some demand from steam crackers has shifted to LPG as a feedstock, as petrochemical producers sought to maximize olefins production due to positive margins.

** Reflecting a weaker naphtha market, the Asia naphtha physical crack against ICE Brent crude futures had fallen from $106.125/mt on March 12 to $95.925/mt on March 19, Platts data showed.

** The Singapore reforming spread, which is calculated as a difference between FOB Singapore 92 RON gasoline and FOB Singapore naphtha derivative, fell from over a one-year high of $9.15/b on March 15, to $7.98/b on March 19, Platts data showed, reducing naphtha's appeal as a blendstock.

** The spread between CFR Taiwan/China paraxylene marker and CFR Japan naphtha physical narrowed $9.375/mt from March 15 to stand at $223.33/mt on March 19, on the back of a downtrend in PX prices, Platts data showed. The margin dropped below the typical breakeven range of $280-$300/mt since March 1.

TOLUENE

** Blending economics for toluene in the gasoline market remained challenging, despite the stark sell-off in previous trade session that sent FOB Korea toluene physical price tumbling to $689/mt on March 19, sources said.

** With the decline, toluene has narrowed its price gap to that of Singapore MTBE, which stood at $672/mt on March 19.

** Toluene fundamentals were showing signs of weakening, as supplies were stable while demand via toluene disproportionation streams had eased on the back of lower downstream aromatics products such as paraxylene and benzene.

ISOMER-MX

** Asian isomer mixed xylenes market underwent a downward price correction that failed to improve the product's position as one of the least attractive blending component in the region.

** FOB Korea isomer-MX retreated $33/mt to $710/mt on March 19. However, the level was uncompetitive in the domestic East China market for gasoline blending.

** Buying indications from Chinese local traders for April delivery mixed xylenes cargoes were described as unattractive, while demand from refiners for paraxylene production, the key demand driver, also slowed.

ETHANOL

** US ethanol continued to rally with focus remaining on falling stocks rather than higher ethanol output. US ethanol stocks dropped by 730,000 barrels to 21.34 million barrels in the week ended March 12. US ethanol production averaged 971,000 b/d during the week, 33,000 b/d higher on the week but 32,000 b/d lower year on year, data from Energy Information Administration showed.

** In the Philippines, buying requirement was recorded for a longer-than-usual period by a buyer while another market participant was keen to procure cargoes in April for June delivery.

** Meanwhile, Philippines domestic ethanol prices in February 2021 climbed 0.26% on a monthly basis to Peso 56.83/liter ($1,180/cu m), data released by the Sugar Regulatory Administration showed. Both molasses and sugar prices climbed.

** US ethanol delivered to the Philippines was assessed at $567.33/cu m on March 19, against $561/cu m on March 12.