Asia octane: Key market indicators this week March 29-April 2

Singapore — The Asian octane market is expected to be mainly led by naphtha and MTBE in the week March 29-April 2, both of which have taken cues from factors outside Asia that have lifted the respective complexes. Meanwhile, other blendstocks face challenging hurdles, with both waning demand and a creeping oversupply keeping prices tame.

NAPHTHA

**The Asian naphtha complex this week will take cues from the blockage at the Suez Canal. Repeated failed attempts to dislodge the container ship, the Evergiven, have helped to firm sentiment in the blendstock market as Western arbitrage shipments face delays.

**The delays have tightened Asian naphtha supply, and have raised the Asia naphtha physical crack against ICE Brent crude futures back above the $100/mt mark, rising $8.60/mt on day to $103/mt at the close of Asian trade March 26. The spread between CFR Taiwan/China paraxylene marker and CFR Japan naphtha physical also rose $4/mt on day to $235.58/mt on March 26, Platts data showed, S&P Global Platts data showed.

**That said, while the Asian naphtha complex has improved, its appeal as a blendstock has reduced with the Suez Canal blockage only having a limited impact on Asian gasoline. The Singapore reforming spread, which is calculated as a difference between FOB Singapore 92 RON gasoline and FOB Singapore naphtha derivative, as such fell to $6.97/b on March 26, a down of $1.23/b, Platts data showed

MTBE

**Participants in the Asian MTBE market are expecting additional demand in the near term, with COVID-19 movement restrictions gradually being eased prior to the spring driving season in Northern hemisphere.

**Malaysia and Indonesia, both large importers of MTBE have especially increased their intake of MTBE, with gasoline blending set to increase ahead of the celebration of the Muslim holy month of Ramadan, when driving activity typically peaks.

**The steady buying interest in the spot trading market as such helped to push the Asian MTBE FOB Singapore marker to high-$600s/mt last week, closing at $693/mt on March 26, Platts data showed.

**Meanwhile, the downstream Asian methyl methacrylate CFR China marker is expected to stay on a downtrend due to the recent slump in China's domestic MMA market.

TOLUENE

**Fundamentals in the Asian toluene market is expected to stay weak this week, with a mix of poor demand and heavy supply exerting downward pressures on the blendstock.

**A large oversupply was reported seen in both South Asia and the Far East, with only a limited handful of buyers seeking high purity materials.

**Even in the gasoline blending field, toluene demand has stayed tepid with blenders shrugging off the recent downward price dip in toluene in favor of other blendstocks that exhibit greater blending value.

ISOMER- MX

**The Isomer-MX market is expected to show mixed signals this week, with fundamentals diverging for varying products.

** Demand was heard mainly coming from PX sector, especially against a backdrop of tight April cargoes. Asian isomer-grade mixed xylene prices to that end rose $26/mt on week at $733/mt FOB Korea on March 26 with paraxylene up $17/mt at $813.33/mt CFR Taiwan/China.

**That said, MX demand is starting to show weakness amid low gasoline blending demand in China. According to market sources, MX prices remain relatively high compared to mixed aromatics, resulting in buyers shifting away from MX.

ETHANOL

**Demand for fuel ethanol has started to wane in Asia, with key buyer the Philippines importing less cargoes due to semi-lockdowns in the country having taken their toll on the demand for motor fuels. An offer was reported in the $485/cu m CFR Philippines.

**That said however, support this week could emerge from data on weaker US ethanol production, as ethanol producers begin spring maintenance that will idle plants. US ethanol production averaged 922,000 b/d in the week ended March 19, down 49,000 b/d on the week and 21,000 b/d lower on the year, Energy Information Administration data showed March 24.

**The support from the cut in US ethanol output in fact, helped to lift prices, with US ethanol delivered to the Philippines being assessed at $569.67/cu m on March 26 against $567.33/cu m on March 19, Platts data showed.