Asia octane: Key market indicators this week

Singapore — A robust increase in Asian gasoline prices due to stronger crude prices and tighter gasoline supply has made gasoline blending economics more attractive in the week starting March 15, market sources said.

Singapore gasoline prices rose by 3.5%-4% in the trading week to March 12, while the prices of most blendstocks, with the exception of ethanol, lagged the rise.

Naphtha was seen as one of the more lucrative blendstocks, with strong reforming margins likely to prompt Asian refiners to raise reformer runs, sources said.

Naphtha

** The Singapore reforming spread, calculated as the difference between FOB Singapore 92 RON gasoline and FOB Singapore naphtha derivative, rose $3.20/b week on week to $9/b March 12 -- a level last seen 10 months ago on May 12, 2020, S&P Global Platts data showed. This makes production of reformate -- blendstock for making high-octane gasoline -- more attractive.

** The Asian naphtha market has begun to see some demand from steam crackers shift to LPG, however overall sentiment remains firm as steam cracker run rates are high on positive olefin margins, while supply is capped due to limited Western arbitrage flows.

** The Asia naphtha crack against ICE Brent crude futures fell $12.10/mt week on week to $100.375/mt at the March 12 Asian close, Platts data showed.

MTBE

** Asian MTBE closed at $713/mt FOB Singapore March 12, extending an uptrend after reaching a 14-month high the week before, driven by firmer gasoline and crude oil markets.

** Taiwanese Formosa Petrochemical Corp.'s tender offering 10,000 mt of MTBE for loading over April 4-6 and April 6-10 was heard to have been concluded at around a high single-digit discount to Mean of Platts FOB Singapore assessments, market sources said. FPCC's previous sell tender was heard to have been awarded at around a $5/mt discount to MOPS MTBE.

** Malaysia's PRefChem has delayed the restart of its 750,000 mt/year MTBE plant from April-May to the second half of 2021, a source close to the company said. The restart has been delayed repeatedly from an initial schedule of September 2020. The MTBE unit was shut in March 2020 in line with all other facilities after a fire at a diesel unit at the PRefChem refinery, Platts reported earlier.

Toluene

** Surging prices in the Asian toluene market has made the petrochemical product the least attractive blendstock component. Most toluene cargoes that flowed into China last week were to fill supply gaps due to refinery turnarounds rather than gasoline blending, sources said.

Isomer-MX

** Gasoline blending activity with isomer-MX remained muted in China, as other blending components were more attractive, sources said. Domestic prices of isomer-MX were higher than other components such as mixed aromatics, a local source said.

** Mixed xylene stockpiles in East China remained largely steady at 101,700 mt as of March 12 compared with 104,400 mt the week before.

Ethanol

** In the Philippines, prompt inquiries for ethanol were heard, with a source estimating that 50% of buying was for the second quarter. Another market participant expected to fulfill requirements for the entire year soon. Elsewhere, a tender was reported in Vietnam for May delivery.

** US ethanol pushed higher during the week as US ethanol stocks fell 355,000 barrels from the week before to 22.07 million barrels, Energy Information Administration data showed March 10. Production averaged 938,000 b/d in the week ended March 5, 89,000 b/d higher on week, but 85,000 b/d lower year on year.

** US ethanol delivered to the Philippines was assessed at $561/cu m March 12, up from $535/cu m on March 5.