Asia light ends - Key market indicators this week

Singapore — The Asian light ends market opened the week of July 13 on a weaker note, tracking losses in Brent crude and greater Chinese gasoline exports, which are keeping the market well-supplied.

August ICE Brent crude futures stood at $42.80/b at 0300 GMT on July 13, down 40 cents/b from the $43.20/b at the Asian close on July 9.

GASOLINE

** The August FOB Singapore 92 RON gasoline swap opened July 13 at around $45.80/b, falling 74 cents/b from the previous trade session on the back of losses in the crude complex.

** Growing supply from China is expected to keep sentiment in the Asian gasoline market pressured this week, as demand -- although still on a path to recovery -- remains below pre-COVID-19 levels.

** The lack of fresh Indonesian gasoline demand will cap any upside, with market participants staying bearish on Indonesian spot appetite in the near term following news that several tankers carrying gasoline had recently discharged at Indonesian ports, signaling ample gasoline supply.

** Non-oxygenated gasoline is likely to see differentials remaining supported, as import demand from consumers of non-oxygenated gasoline including Australia, Japan, Philippines and Thailand stay at healthy levels amid tepid domestic refinery run rates.

NAPHTHA

** The CFR Japan naphtha physical benchmark opened July 13 at $398.25/mt, down $5.50/mt from the Asian close on July 9, on lower crude prices.

** The front month August/September Mean of Platts Japan naphtha swap spread was stable from July 9 in mid-morning trade on July 13, with broker indications at $5.50/mt. The spread has been rangebound around $5.50-$6.75/mt since July 1.

** Tight supply had boosted cash differentials for CFR Japan spot naphtha parcels to a near five-month high of $25/mt over July 7-8, however, this edged down $2/mt day on the day to $23/mt July 9, Platts data showed.

** The ethylene-naphtha margin fell below $400/mt for the first time in a month on July 9 due to ample supply of ethylene, but overall olefins margins remained positive. Asian steam cracker operators are expected to maintain operations at full capacity in July, sources said.

** The spread between CFR Northeast Asia ethylene and CFR Japan naphtha physical was at $396.25/mt at the July 9 Asian close, down by $2.50/mt on the day, $95.625/mt from July 3, Platts data showed. This is above the typical breakeven spread of $350/mt for non-integrated producers.

LPG

** Front month August CP propane swap was notionally indicated on July 13 at $347/mt, down from $348/mt on July 9. CP August/September propane swap spread notionally widened to plus $3/mt on July 13, compared with plus $1/mt on July 9.

** Renewed appetite for LPG imports is expected from India after the government approved on July 8 to extend the provision of free LPG cylinder refills for Pradhan Mantri Ujjwala Yojana, or PMUY, beneficiaries, by three more months to September 30.

**Kuwait Petroleum's latest tender offering 44,000 mt mixed LPG comprising 33,000 mt of propane and 11,000 mt of butane for August 4-5 loading, was awarded late July 10 at August CP minus around $30/mt, as OPEC+ oil production cuts fail to stem widening discount for FOB Arab Gulf propane differentials. The discount was assessed at $21/mt on July 9. Pressure remains on the FOB AG market as Asian end-users peg their buying price for AG cargoes against competitively priced Western cargoes.

**Qatar Petroleum for the Sale of Petroleum Products, or QPSPP, will be pressured to offload some spot volumes at steep discounts for July-August loading, sources said. Unlike other Middle Eastern LPG producers, Qatar's LPG export volumes were not impacted from crude production cuts.

** Firmer butane demand from Asian steam crackers, as well as demand for August delivery mixed cargo into Indonesia, has seen the propane-butane spread narrow over the last week. Butane was notionally indicated at a discount of $11/mt to propane on July 13, up from minus $20/mt on July 1.