ASIA OCTANE: Key market indicators Nov 1-5

Gasoline blendstock prices rose week on week, pulled upwards by the recent strength in Asia's gasoline complex and easing pandemic movement control restrictions in the region.

Zhejiang Petroleum & Chemical was expected to ramp up refinery runs as the producer received an import quota for 12 million mt of feedstock crude oil, which is likely to increase the supply of finished gasoline.

ICE Brent crude oil futures edged down 0.5% day on day to $84.40/b at the Asia close Oct. 29, which led gasoline prices down slightly on a week on week basis, Platts data showed.

On Nov. 1, front month Brent crude futures fell to $83.40/b during mid-morning trade in Asia, led by weak economic data out of China.

Naphtha

** Asian naphtha was slated to see activity pick up for second-half December delivery into North Asia with the start of the new trading cycle on Nov. 1.

** Demand for naphtha as a steam cracker feedstock was supported as key CFR Northeast Asia ethylene and C+F Japan naphtha spread remained above the typical breakeven level of $300-$350/mt for non-integrated producers, keeping operating levels at near full, or full capacity, market sources said. The spread rested at $410.375/mt at the Oct. 29 Asian close, Platts data showed.

** Strength in the market was seen as the CFR Japan naphtha physical crack against front month ICE Brent crude futures rose $4.85/mt day on day to $156.625/mt at the Oct. 29 Asian close, Platts data showed.

** Gains in naphtha outpaced that of gasoline as the reforming spread -- the difference between Singapore 92 RON gasoline and Singapore naphtha derivative -- narrowed by 19 cents/b day on day and 11 cents/b week on week to $9.56/b Oct. 29, Platts data showed. The narrowed reforming spread may weigh on naphtha demand as a gasoline blendstock.

MTBE

** Asian MTBE is expected to be on an upward trajectory on the back of the continued rally in crude and gasoline markets as well as Southeast Asia's recovering demand.

** There was a glimpse of demand recovery in Malaysia, where COVID-19 restrictions were being lifted. Malaysia's MTBE imports from Singapore spiked 500% on the month to 9,367 mt in September.

** MTBE gasoline blending value was estimated at around $223.7150/mt, while the MTBE margin at $105.07/mt as of Oct. 29, Platts data showed.

Toluene

** The strength in Asian toluene is seen supported in the Nov. 1-5 trading week after toluene values surged Oct. 29 with the sudden resurgence of buyers in the domestic China market for gasoline blendstocks.

** China's domestic ex-tank supplies rose sharply after reports of declining inventories were released, trading sources said. East China inventories dropped 19.76% to 33,300 mt week on week, sources said.

Isomer-MX

** China's demand for isomer-MX as a gasoline blendstock is likely to be sluggish Nov. 1-5 after news that Zhejiang Petroleum & Chemical is set to ramp up refinery runs.

** MX inventory in East China shrunk to a 21-month low of 27,600/mt though, so China's supply of MX remains tight in key ports such as Zhangjiagang, and may continue to support ex-tank prices there.

** Margins with paraxylene remain under pressure in the wake of the news of ZPC's production ramp up, with the PX-MX spread ending the week at $88.50/mt on a CFR basis.

Ethanol

** US ethanol delivered to the Philippines rose to $742.33/cu m on Oct. 29 against $681.67/cu m.

** Valuations for US ethanol moved higher during the week as tightness in the prompt steepened the forward price curve as demand remains robust despite the creeping uptrend in production.

** US ethanol production for the week ended Oct. 22 averaged 1.106 million b/d, adding 10,000 b/d on the week, the Energy Information Administration data showed Oct. 27.

** Offers for December added $20/cu m to $770/cu m CFR Philippines with oil companies engaged in discussions for Q1 deliveries. Ethanol demand forecasts had been ramped up as COVID-19 restrictions ease and economic activity picks up.

Data from: S&P Global Platts