Asia octane: Key market indicators this week

Singapore — The recent increase in Asian gasoline is expected to benefit blendstocks such as MTBE and naphtha in the week of April 18, while tightened supply due to the current turnaround period in Japan is expected to benefit the isomer-MX complex. For other octane blendstocks such as ethanol and toluene, however, poor demand will likely cap any uptick in sentiment.

Naphtha

** The Asian naphtha market is expected to see fundamentals improve in the week of April 18, as crackers of Formosa and PTT were slated to return from unplanned shutdowns, according to market sources.

** In anticipation of the cracker returns, the Asia naphtha physical crack against ICE Brent crude futures rose from $84.45/mt on April 12 to $86.65/mt on April 16, S&P Global Platts data showed.

** A wide Singapore reforming spread will likely draw demand toward naphtha, with the spread -- calculated as the difference between FOB Singapore 92 RON gasoline and FOB Singapore naphtha derivative -- assessed at $10.42/b at the Asian close April 16, just shy of the 13-month high of $10.98/b assessed a day earlier.

MTBE

** Participants in the Asian MTBE market remain optimistic on regional fundamentals, especially amid firmer MTBE buying interest in the spot market, bullishness in the Asian gasoline complex and a supported international crude complex.

** An upcoming spring and summer driving season in North Asian countries such as South Korea and Japan is also expected to inject some demand.

** In the near-term, however, industry sources have warned that seasonally poor Ramadan driving period in countries such as Indonesia and Malaysia this year will likely cap the demand uptick of the high-octane blendstock.

Isomer-MX

** Tightened Asian supply due to the current turnaround season in the key producing country Japan is expected to buoy prices in the isomer-MX sector in the week of April 18. The isomer-MX spread to naphtha widened $15.75/mt to $183/mt on April 16, Platts data showed.

** The margin for paraxylene production, however, still remains poor despite a slight week-on-week improvement. The PX-MX spread was at $66.83/mt on April 16 on a CFR basis.

Toluene

** The Asian toluene market is expected to remain subdued in the week of April 18, with lackluster demand from the toluene disproportionation sector continuing to add downside pressure for the blendstock even as the latter's appetite for benzene was heard to be growing.

** However, some hope remain for the toluene complex, with participants looking at possible demand from the gasoline blendpool as rising prices of MTBE increases toluene's chance as an alternative gasoline blendstock.

** In contrast to toluene, which saw FOB Korea toluene assessed at $707/mt on April 16, the FOB Singapore MTBE physical marker was assessed sharply higher at $750/mt, Platts data showed.

Ethanol

** Fundamentals in the ethanol complex continues to be supported by non-Asian factors, with soaring prices of corn and bullish ethanol production data lifting prices of US ethanol.

** US ethanol delivered to the Philippines was assessed at $616.67/cu m on April 16, up from $599/cu m on April 9, Platts data showed.

** Meanwhile in Asia, Philippines' demand for fuel ethanol remains weighed down by existing movement restrictions. According to traders, much of buying for the second quarter of 2021 has already been fulfilled and although a couple of players have not been seen making purchases for June, the current lockdowns have casted doubt on their purchases.