Asia light ends - Key market indicators this week

Singapore — The Asian light ends market rose in mid-morning trade on Aug. 31 amid a stronger crude complex, with gasoline and naphtha also underpinned by day-on-day gains in the US RBOB crack.

Saudi Aramco is expected to announce the September propane and butane contract price around mid-day on Aug. 31.

November ICE Brent crude futures stood at $46.11/b at 0300 GMT Aug. 31, up from $45.44/b at the Asian close on Aug. 28.

GASOLINE

** The September FOB Singapore 92 RON gasoline swap opened Aug. 31 at around $48.80/b, inching up by 4.4% day on day, as news of delayed restart at US Citgo and Phillips 66 refineries in Lake Charles helped to buoy the RBOB/Brent crack.

** The support however, is expected to wane through the week, as the bullish lift from the US RBOB/Brent crack dissipate following the restart of other major US refineries in Texas. At 0230 GMT Aug. 31, the US RBOB/Brent crack was at $9.23/b, though up 8.95% on the day, but remained sharply under the five-month high of $12.02/b on Aug. 25.

** Sentiment in Asia is expected to stay lackluster amid heavy Chinese supply. China is estimated to export around 1.4 million-1.5 million mt of gasoline in September, according to market sources, keeping steady from August as Chinese domestic refineries aim to offset heavy domestic inventories.

** Against the backdrop of heavy Chinese supply, Ampol's 109,0000 b/d Lytton Refinery and Petron's 180,000 b/d Bataan refinery will be restarted during the week from turnarounds. Import demand from the Australia and Philippines as such, is expected to slide, further adding to downside pressure to the motor fuel complex.

NAPHTHA

** The physical CFR Japan naphtha benchmark opened Aug. 31 at $413.50/mt, up $8.50/mt from the Asian close on Aug. 28, boosted by higher crude and strength in the European naphtha complex.

** Trading for H2 October delivery naphtha cargoes into North Asia is slated to begin later in the week in September.

** The Asian naphtha market sentiment was largely stable over the week ended Aug. 28, with cash differentials for C+F Japan naphtha assessed at parity over Aug. 25-27 and plus 25 cents/mt at the Aug. 28 Asian close, Platts data showed. This was a rebound from a near four-month low reached on Aug. 18, when the cash differential was at minus $5/mt.

** Steady sentiment was also reflected in the paper market, as front month September/October Japan naphtha swap remained in a backwardation structure of $1.25/mt at the Asian close Aug. 28, Platts data showed. The structure widened mid-morning Aug. 31 to $1.50/mt, brokers said.

LPG

** Front month September CP swap was notionally indicated Aug. 31 at $375/mt, versus $374/mt valued Aug. 28, while butane CP swap was indicated $8/mt below propane.

** Saudi Aramco expected to announce September term contract prices around mid-day Aug. 31, with some traders expecting propane to be set around $5-$10/mt above CP swaps.

** Indian Oil Corp. has awarded its import tender of two 44,000 mt evenly split cargoes for CFR Ennore or Haldia arrival over Oct. 11-20 and CFR Vizag or Haldia over Oct. 21-31, at a premium of around $30-$35/mt to the Saudi Aramco October CP, CFR basis, a trade source said.

** Traders watching if India would seek more for November or December arrival during the festive season or if the persistent coronavirus pandemic would affect demand.

** Traders said while Chinese retail demand was steady. Additional buying by propane dehydrogenation, or PDH, plants may have to wait till October, as companies such as Yantai Wanhua Chemical delayed startup of its LPG cracker and downstream chemical units to end-October, while Oriental Energy deferred the twice-delayed startup of its PDH plant in Ningbo to H2 October.