ASIA OCTANE: Key market indicators for Aug 8-12

Asian gasoline and its blendstocks are expected to soften in the week of Aug. 8-12 on the back of an expected drop in Malaysia's driving activity and reduced blending interest from South Korea and Taiwan amid falling run rates, market sources said.

At 0300 GMT Aug. 8, ICE July Brent crude oil futures was up 0.49% from the previous Asian close at $94.93/b, S&P Global Commodity Insights data showed.

Malaysia's driving activity is expected to fall, moving away from the school holiday period, market sources said.

Blending interest in South Korea and Taiwan was decreasing as run rates are expected to fall going into September, market sources said.

South Korea's SK energy is expected to carry out maintenance at its 840,000 b/d Ulsan and 275,000 b/d Incheon refineries sometime between late September and end October, market sources said.

Naphtha

** Demand in the Asian naphtha complex was expected to remain weak on poor demand for downstream plastic derivatives amid ample supply.

** The naphtha physical C+F Japan cargo averaged $785.11/mt in July, down from $822.89/mt in June, S&P Global data showed. Naphtha prices have been on a downtrend since March this year when they hit a high of $1,158.63/mt March 7.

** Despite falling naphtha prices, the key spread between CFR Northeast Asia ethylene and CFR Japan naphtha physical was still hovering below the minimum breakeven level of $250/mt for integrated producers since May 13. The spread was at $174/mt at the Asian close Aug. 5, widening $36.25/mt on the week, data from S&P Global showed.

** Supply was ample with Middle East producers offering up to 120,000 mt naphtha via tenders in the previous week.

** Blendstock demand for naphtha looked likely to slump as the reforming spread -- the difference between FOB Singapore 92 RON gasoline and Singapore naphtha derivative -- had narrowed $10.35/mt on the week to $25.05/mt, S&P Global data showed. The narrowed spread shows that naphtha is less economically viable now as a gasoline blendstock amid an overall fall in gasoline demand.

MTBE

** The Asian MTBE FOB Singapore marker is expected to be on a downtrend after hitting a fresh six-month low at $952/mt Aug. 5, S&P Global data showed. MTBE has been pressured by a weaker energy complex and tapering summer driving demand in the region, market sources said.

** The FOB Singapore MTBE marker was last lower at $949/mt on Feb 3.

** Despite the slump in the energy complex, the MTBE price was expected to be relatively well sustained, thanks to tighter supply on lower run rates and fewer Chinese exports into Singapore, as well as steady arbitrage demand from out of Asia.

Toluene

** Toluene market supply is expected to tighten further moving forward with several South Korean steam crackers due to go under maintenance in September, market sources said.

** Asian toluene was assessed $33/mt lower day on day at $909/mt FOB Korea and down $15/mt at $964/mt CFR China Aug. 5 on the back of weaker crude prices, S&P Global data showed.

Isomer-MX

** Asian isomer-grade mixed xylenes prices are likely to track crude oil and paraxylene prices in the week to come. This was expected to be tempered by weak demand from major end-users in paraxylene and sluggish Chinese demand, market sources said.

** In the week ended Aug. 6, isomer-MX fell $50/mt at $956/mt FOB Korea Aug. 5, with the spread to downstream market PX narrowing $17.67 at $97/mt, S&P Global data showed.

** Gasoline blending demand seemed weak for MX as margins have fallen on the year from midyear highs of 2021, market sources said.

Ethanol

** Asian fuel ethanol is expected to continue on a downtrend in the week amid lingering uncertainties surrounding US ethanol futures and global energy prices.

** Data released Aug. 3 by the US Energy Information Administration showed that ethanol production rose 22,000 b/d for the week ended July 29 while stocks rose 66,000 barrels to 23.394 million barrels.

** The Philippines' gasoline prices have eased slightly but levels still remained elevated at Pesos 75/l, market sources said.

** The Platts Bioethanol CIF Philippines was assessed at $736.33/cu m on Aug. 5, down from $798.67/cu m on July 29, S&P Global data showed.