Asia octane: Key market indicators for March 28-April 1

Demand for Asian gasoline is expected to increase over March 28- April 1 as regional economies are set to ease COVID-19 travel restrictions, market sources said.

Both Singapore and Malaysia are set to reopen borders to international travelers starting April 1, possibly adding to gasoline demand, according to local media.

Interest in gasoline blending was also heard increasing, amid attractive margins, market sources said.

"Blending gasoline seems to be attractive, as margins are good, some big trading arms have recently purchased blendstocks from China and Taiwan", an industry source said.

Buying interest for 95 RON gasoline was heard from Vietnam and Indonesia, market sources said. Power outages at Vietnam's refineries meant lesser domestic production and the country was heard importing more 95 RON gasoline to keep domestic supply stable.

Increased demand for 95 RON gasoline had boosted demand for toluene, which is typically used in gasoline blending to increase the octane number of the gasoline produced.

At 0318 GMT March 28, May ICE Brent crude oil futures were up by 1.21% from the previous Asian close March 25 at $116.34/b, S&P Global Commodities Insight data showed.

Naphtha

** Asian naphtha is set to remain bearish this week on weak demand from steam crackers, which dropped the key CFR Japan naphtha physical crack against front month ICE Brent crude futures to $93.45/mt at the March 25 Asian close, down $44.125/mt week on week, S&P Global data showed.

** Feedstock naphtha demand was slammed by not only wide spread steam cracker run cuts, but also the use of LPG as an alternative cracker feedstock.

** Bearish naphtha prices supported current levels of the reforming spread, which could improve its competitiveness as a gasoline blendstock.

** The Singapore reforming spread, the difference between Singapore 92 RON gasoline and Singapore naphtha derivative, ticked up 90 cents/b week on week to $20.35/b at the March 25 close, S&P Global data showed. Last week, the reforming spread had reached over a nine year high of $21.85/b on March 22.

** Downstream weakness was also evident in the aromatics sector as the key CFR Taiwan/China paraxylene to C+F Japan naphtha cargo spread remained below the typical breakeven level of $280-$300/mt.

MTBE

** Asian MTBE marker is expected to be on an upward trajectory this week, on the back of improving gasoline blending demand in Southeast Asia, ahead of Ramadan and tight supply in Malaysia due to the delayed restart of an MTBE plant there.

** Downstream, methyl methacrylate production margin from feedstock MTBE remained in the doldrums, hit by the surge in upstream MTBE prices. The margin collapsed to the all-time low of minus $890.25/mt, when the FOB Singapore MTBE hit the all-time high of $1,345/mt on March 7, S&P Global data showed.

Toluene

** Toluene prices are likely to follow the uptrend in oil markets this week as uncertainties surrounding the Russia-Ukraine conflict persists.

** Asian supply is expected to be tight, with limited offers available in the May spot market. However, China was heard selling 8,000 mt of toluene last week, market sources said.

**Asian toluene price was assessed up $70/mt on the week at $1,080/mt FOB Korea March 25, S&P Global data showed.

Isomer-MX

** Fluctuations in isomer-MX prices are expected to continue this week, mirroring upstream price movements and volatility, a market source said. FOB Korea prices fell at the week ended March 25 to settle at $1,113/mt, S&P Global data showed.

** Conversations on the actual resumption of supply from Japanese producers were ongoing and this added to the tightness of prompt supply, a market source said. Interest for April loading cargoes remain supported, with market participants saying that prompt supply was tight.

Ethanol

**Buying in the Philippines is expected to be muted in the coming week with the Local Monthly allocations for Q3 yet to be unveiled.

**Offers stood at around $770/cu m to $780/cu m CFR Philippines with buyers unwilling to inquire about offers, S&P Global data showed.

**The Asian fuel marker climbed to $750.33/cu m March 25 from $743/cu m on March 18, S&P Global data showed.