Asia light ends: Key market indicators for May 9-13

Asia's light ends markets are mostly entering the May 9-13 trading week on an upbeat note, with higher crude futures adding to bullish sentiment for gasoline demand for travel and naphtha leveraging the recovery seen in Europe.

But LPG is softening on a lull in regional demand after interest during the festive season and healthy supply early in the month. Recent South Korean and Taiwan petrochemical-sector demand was being followed by regular requirements from Chinese propane dehydrogenation plants, even though margins remained poor.

Gasoline

** Asia's gasoline complex is expected to strengthen in the week to May 9 as easing COVID-19 restrictions in regional economies boost travel demand, market sources said.

** Higher gasoline demand is expected from Thailand and Cambodia due to more inter-country travel following the reopening of the Chong Chom border May 6, local media reported.

** Reflecting the stronger market sentiment, brokers pegged the front-month FOB Singapore 92 RON gasoline crack against Brent swap at $25.15-$25.20/b at 0300 GMT May 9, up from $24.05/b at the Asian close May 6 based on S&P Global Commodity Insights data.

** A tighter US market due to a draw in gasoline stocks last week also boosted sentiment in Asia, with the US RBOB-Brent crack widening 10.05% from the May 6 Asian close to $46.63/b in mid-morning trade May 9, S&P Global data showed. US gasoline stocks fell 2.23 million barrels week on week to 228.58 million barrels in the week ended April. 29, US Energy Information Administration data released May 4 showed.

Naphtha

** The physical C+F Japan naphtha marker rose $13/mt from the previous Asian close to $923/mt in mid-morning trade May 9 on higher crude and a recovery in the European naphtha complex.

** Sentiment was seen firming in the derivatives market, with brokers pegging the front-month June-July Mean of Platts Japan naphtha swap time spread up $3.75/mt from May 6 close at $7/mt in mid-morning trade.

** Gasoline demand, and thus demand for blendstock naphtha, was a supporting factor for naphtha, which saw muted petrochemical feedstock demand as Asia's steam crackers maintained lower operations of around 80%-90% capacity and looked to cheaper LPG as alternate feedstock.

** The spread between CFR Northeast Asia ethylene and CFR Japan naphtha physical narrowed $32.75/mt day on day to $280/mt at the May 6 Asian close, S&P Global data showed, weighing on steam cracker demand for paraffinic naphtha as it was below the typical breakeven spread for non-integrated producers of $300-$350/mt, sources said.

LPG

** The front-month June propane contract price swap was indicated at $804/mt in mid-morning trade in Asia May 9, down from $819/mt May 6 and $46/mt below May term contract prices.

** The Saudi CP June-July backwardation was pegged at $8/mt in mid-morning trade in Asia May 9, narrowing from $11/mt May 6. The premium of the June CP propane to butane held at $8/mt May 9 as Indonesia has covered its recent requirements to replenish stocks drawn down by consumption

during festivities, while India's spot demand remained absent.

** LPG demand was coming mainly from the North Asian petrochemical sector, as propane and butane persisted at deep discounts to naphtha. The June FEI propane swap to the Mean of Platts Japan naphtha assessment was indicated at a discount of $107.01 /mt in mid-morning trade May 9, brokers said, widening from $82/mt May 6.

** Abu Dhabi National Oil Co. is due to announce acceptances of June-loading term nominations around May 10, followed by Saudi Aramco by May 20.

Qatar Petroleum's acceptances of June-loading nominations had no cuts or delays, though some lifters were heard to have cargoes advanced to earlier loading dates and some dates pushed back.

** QP has yet to show new spot offers via tender for June-loading cargoes, after selling two cargoes via tender last month for May 29-30 loading; 33,000 mt of propane and 11,000 mt of butane, plus a 44,000 mt evenly split cargo, at premiums of $2/mt to June CPs to buyers in China and India, traders said.