Asia light ends - Key market indicators this week

Singapore — The Asia light ends market was mixed during mid-morning trade April 26, with gasoline and naphtha posting gains from higher crude, while LPG prices dip amid ample supply.

Asia gasoline sentiment is likely to be cautious in week starting April 26 amid rising number of COVID-19 cases in India and Malaysia, which could see more Indian cargoes offered in the market, while Asian naphtha demand remains supported by positive olefins margins and LG Chemical's impending steam cracker start up in June.

Saudi Aramco is expected to lower the May propane and butane Contract Prices in its announcement end-week, reflecting plentiful supply in the Middle East, although Indonesia and India have emerged to seek spot cargoes for June.

GASOLINE

**The May FOB Singapore 92 RON gasoline swap stayed firm in early April 26 trading, rising marginally by 0.88% from the previous trading session at around $72.15/b, as higher crude prices helped to offset an easing US RBOB-Brent crack.

**Asian gasoline market participants will likely be cautious this week, watching for growing bearish cues on both the supply and demand end. On demand, eyes are fixed on pockets of growing COVID-19 cases in Asia, with Thailand announcing April 24 new movement restrictions in an attempt to rein in record high number of infections.

**Malaysia, which continues to see rising COVID-19 cases, reported four more new cases of the more infectious South African variant on April 24, according to local media reports.

**Spikes in new infections from key gasoline exporters sparked worries that refiners will move more motor fuel into the regional market.

NAPHTHA

**Physical CFR Japan naphtha stood at $568.625/mt mid-morning April 26, up $5.59/mt from the Asian close on April 23 due to higher crude markers.

**Firmer sentiment reflected in the swaps market, as front-month May-June Mean of Platts Japan naphtha swap spread was pegged by brokers at $4/mt mid-morning April 26, higher than the Asian close on April 23, which was $3.75/mt, Platts data showed.

**Use of LPG as an alternative steam cracker feedstock weighs on the naphtha complex, however, overall demand is expected to remain supported by positive olefin margins and South Korea LG Chem's new steam cracker start up in June.

**Supporting firm naphtha demand by steam crackers, the key spread between CFR Northeast Asia ethylene and CFR Japan naphtha physical was assessed at $541.875/mt April 23, up $25.875/mt week on week, Platts data showed.

LPG

**Front-month May CP propane swap notionally indicated April 26 at $491.5/mt, versus $493/mt valued on April 23.

**May-June CP propane backwardation indicated at $8/mt April 26, versus $12/mt previous session. May propane CP swaps indicated $24/mt above butane.

**Saudi Aramco due to announce May term CPs by end-week, with propane expected between $460/mt and $500/mt, and butane CP $20-$30/mt below that.

This will be the second decline in a row for the CPs, reflecting ample supply with Middle East producers largely accepting term nominations for May without cuts, while Kuwait Petroleum Corp. and Qatar Petroleum offer, or sell, spot cargoes for May loading.

**Demand, which has been slow from India and Indonesia, has reemerged, with Indian Oil Corp. issuing a tender seeking 45,000 mt of evenly split LPG for H2 June, while Pertamina seeks via tender 44,000 mt of evenly split cargoes monthly for one-year delivery starting June.