Asia octane: Key market indicators for April 18-22

Demand for Asian gasoline and its blending components is expected to strengthen over April 18-22, amid interest in high RON gasoline from Malaysia as interstate travel is expected to pick up at the end of Ramadan, market sources said.

Interest in blending low RON Chinese exports to produce high RON gasoline was heard from Malaysia for H2 April, market sources said.

Demand for gasoline in Vietnam remained firm mid-April due to continued government mandated import quotas on several Vietnamese companies, S&P Global Commodity Insights previously reported.

At 0300 GMT April 18, June ICE Brent crude oil futures were up 4.03% from the previous Asian close on April 14 at $112.99/b, S&P Global data showed.

Naphtha

** Buying activity in Asian naphtha for first-half June delivery into North Asia is expected to pick up the week starting April 18. Last week, buying had begun for H1 June delivery, and sources said demand was expected to improve compared with H2 May-delivery on healthier ethylene-naphtha margins.

** Naphtha demand as blendstock is likely to be supported this week in preparation for summer driving season in key regional economies. The Singapore reforming spread widened 96 cents/b week on week to $22.26/b at the Asian close April 14, and was $1.60/b higher than the month-to-date average of $20.66/b, S&P Global data showed.

** Demand for naphtha as steam cracker feedstock was dampened by weak olefin margins. The key CFR Northeast Asia ethylene and C+F Japan naphtha narrowed $141.75/mt week on week to $367/mt April 14, S&P Global data showed. Despite the spread remaining above typical breakeven levels of $300-$350/mt, sources were cautious that demand for naphtha as a steam cracker feedstock would weaken further this week.

MTBE

** Asian MTBE expected to remain tight in Singapore this week, market sources said.

** China was reportedly holding numerous MTBE cargoes, however, shipping logistics are challenging in East and South China due to COVID-19 lockdowns.

Toluene

** Asian toluene fundamentals likely to be more balanced this week, with demand slowing and several parcels seen available for H2 May loading, trading sources said. However, crude spikes will likely continue to pull toluene prices up.

** Naphtha prices are picking up strength causing the toluene-naphtha spread to narrow, but blending margins look feasible, while demand for toluene by blenders continue to be supported, trading sources said.

** The toluene-naphtha spread held above above the $100/mt mark, settling at $102/mt April 14, S&P Global data showed. The spread has been under $100/mt for most of September 2021 through to March 25.

Isomer-MX

** Asian MX is likely to continue tracking the volatility in crude oil this week, while supply remains limited and demand in China low.

** Asian isomer-grade mixed xylene rose in the week ending April 15 by $44/mt to $1,098/mt FOB Korea April 14 on the back of firm crude oil and naphtha prices, S&P Global data showed.

** Demand for April and May delivery cargoes in China remains low with domestic prices in East China far below international levels, market sources said.

** May-June MX supply is tighter with Japan's Taiyo Oil set to start maintenance at its petrochemical facilities in mid-May. The company has the capacity to produce around 700,000 mt/year of isomer-MX.

Ethanol

** Inquiries for Q3-delivery ethanol has started and is expected to intensify in the coming weeks, market sources said.

** The sharp climb in ethanol resupply economics into Asia, has made buyers wary of purchasing ethanol, market sources said.

** Bioethanol CIF Philippines was assessed at $787/cu m April 14 against $744.33/cu m on April 4, S&P Global data showed.

** US ethanol values gained ground on the back of supportive stocks data, following a 1.1 million-barrel stock draw on the week ended April 8, Energy Information Administration data dated April 13 showed.