Weekly outlook: Asia LPG, naphtha, gasoline

Singapore — Asia's light-end markets opened the week firmer, tracking gains on the crude complex, which jumped ahead of the OPEC+ meeting to discuss output cuts, but gave back some gains after the virtual meeting was postponed to Thursday from Monday.

Jun ICE Brent crude futures stood at $33.27/b at 0300 GMT Monday, up from $30.91/b at Friday's 0830 GMT close.

LPG

**Front month May CP propane swap notionally indicated at $265/mt Monday, up $17/mt from last Friday's close, while May/June backwardation is steady at $14/mt.

**Attention is on Middle East producers' acceptances of May-loading term nominations amid uncertainty over whether Saudi Arabia and Russia would agree to US President Trump's proposal to cut, or continue with increased oil output, which had sparked price fluctuations. Qatar Petroleum last week announced no cuts and delays. ADNOC and Saudi Aramco will announce acceptances this week and next.

**Nationwide lockdown in India prompted higher cooking fuel demand and LPG imports for deliveries up to June. Traders watching if Indian demand will ease with the onset of summer end-June even as Middle East supply remains healthy.

**Chinese demand set to sustain recovery, as industrial activity intensifies and with smooth approvals of US import tariff exemptions.

**Traders mixed on Chinese imports, with some saying May deliveries could reach up to 1.8 million mt, while others expect volumes to remain around 1.5 million to 1.6 million mt.

NAPHTHA

**CFR Japan naphtha benchmark opened Monday at $213.17/mt, up $8.67/mt from Friday's Asian close, on crude gains.

**The spread between May CFR Japan naphtha and CIF NWE naphtha edged down 50 cents/mt Monday morning to $30.50/mt, from Friday's Asian close on higher naphtha prices in Europe last Friday. Traders had booked more than 2 million mt of European naphtha into Asia for May-arrival on the wide open arbitrage, market sources said. US traders were also keen to send surplus cargoes into Asia, and had already booked at least 332,000 mt of naphtha for such voyages.

**Asian buyers were still mulling purchases for H2 May delivery naphtha, when H2 May trading began last Wednesday, as the trading period was well supplied on surplus Western cargoes.

**Asian steam crackers were slated to maximize use of naphtha over LPG as feedstock due to the recent naphtha price plunge, which prompted LPG to flip to a premium to naphtha on March 27, Platts data showed.

GASOLINE

**May FOB Singapore 92 RON gasoline was steady to firmer Monday morning, up marginally to $25.38/b from Friday's close of $25.30/b, despite crude gains on bearish supply-demand fundamentals.

**The derivative crack spread opened Monday at a new record low -- the Singapore 92 RON gasoline crack against Brent swap fell to minus $9.30/b, from minus $7.31/b at the Asian close Friday.

**Regional demand is slated to fall further this week with more COVID-19 containment measures -- Vietnam's major cities Hanoi and Ho Chi Minh City prepare for possible lockdown; Singapore schools and most workplaces to close for one month from Tuesday; Thailand's six-hour night curfew effective last Friday.

**Indian refiners are exporting prompt-loading gasoline to alleviate tank-top issues, but low buying interest led to tenders being awarded at heavy discounts. India's Nayara sold up to 60,000 mt of 92 RON gasoline for mid-April loading from Vadinar at a $4/b discount to MOPS 92 RON gasoline.