Asia light ends: Key market indicators for June 6-10

Asia's light ends markets entered the June 6-10 trading week at elevated levels as an upswing in crude futures drove up price levels.

Gasoline prices in the region were being supported by US summer driving demand, and while the same season typically would mean a seasonally low LPG market, the US was mulling allowing butane as a summer-grade gasoline blendstock, which strengthened the butane market.

While crude strength has driven up naphtha prices, the market was fundamentally weak from a lack of demand from naphtha-fed steam crackers.

Naphtha

** Physical C+F Japan naphtha marker rose $44/mt from the previous Asian close to $899/mt in mid-morning trade June 6 on the back of higher crude.

** The paper market remained in contango due to weak demand. Brokers pegged the front month June-July Mean of Platts Japan naphtha swap time spread at minus $4/mt in mid-morning June 6. This however, was a rebound from $5.25/mt at the June 3 Asian close, as the market might be anticipating some end-users making spot purchases for the current H2 July delivery cycle after a lack of activity last week.

** A lack for spot requirements by several naphtha-fed steam crackers was reported for the July delivery cycle, which weighed down cash differentials for spot paraffinic naphtha parcels. Cash differentials have been negative since April 27 and were last assessed at minus $7.75/mt at the Asian close June 3 against benchmark Mean of Platts Japan naphtha physical on a CFR Japan basis, S&P Global data showed.

** Naphtha was heard to be in demand for aromatics production, however splitters were struggling to find heavy-full range naphtha cargoes as feedstock, which capped their operational levels.

Gasoline

** Asia's gasoline complex was expected to strengthen over June 6-10 tracking gains from the US-RBOB Brent crack and strong domestic demand from India and China, market sources said.

** India's demand was being supported by tax cuts on domestic fuel, while China's was expected to strengthen following the easing of COVID-19 restrictions in Shanghai, market sources said.

** Reflecting stronger market sentiment, brokers pegged the front-month FOB Singapore 92 RON gasoline crack against Brent swap at $27.05-$27.10/b at 0300 GMT June 6, up from $26.44/b at the Asian close June 3, S&P Global data showed

** Asian cracks were tracking gains in the US-RBOB Brent crack, which was up $1.23/b at 0300 GMT June 6 from the previous Asian close at $60.51/b, S&P Global data showed.

** The rise in the US-RBOB Brent crack came after US gasoline stocks fell 711,000 barrels to 218.996 million barrels in the week ended May 27, US Energy Information Administration data released June 2 showed.

LPG

** The Asia LPG market was expected to see cargo acceptances for the July loading program from ADNOC later this week, following the announcement of Qatar's July cargo acceptances last week, which were in line with nominations.

** CP June butane swaps was pegged mid-morning June 6 at $8/mt above propane, versus $7/mt the previous session, as the US mulled allowing the use of butane as a blendstock for summer-grade gasoline.

** The discount of the June FEI propane to Mean of Platts Japan naphtha assessments was pegged mid-morning June 6 at $104/mt, widening from $76.25/mt the previous session, keeping LPG viable as alternate cracker feedstock.

** Persian Gulf-Japan VLGC freight rates have retreated from over one-year highs due to excess tonnage available for the third decade of June. The key PG-Japan freight reached $105/mt May 31, the highest since touching at $108/mt on Jan. 15, 2021, and was last assessed at $94.50/mt at the Asian close June 3, S&P Global data showed.