Asia light ends: Key market indicators for Sept. 6-10

Asia's light end markets fell in mid-morning trade Sept. 6, pressured by lower crude prices and the recovery of US Gulf refining operations from Hurricane Ida.

Front-month ICE October Brent crude futures stood at $71.82/b at 0400 GMT Sept. 6, down $1.41/b from the Asian close Sept. 3.

Naphtha saw support from positive olefin margins and limited US Gulf arbitrage volumes, while gasoline was supported by an uptick in driving activity in Southeast Asia.

LPG prices were weighed down by upcoming propane dehydrogenation plant shutdowns due to planned maintenance.

GASOLINE

** The October FOB Singapore 92 RON gasoline swap was notionally pegged at about $78.62/b in early Sept. 6 trading, a 1.60% drop from the previous trading session, as bearish economic indicators in the US weighed on the crude complex, while the US RBOB-Brent crack weakened after gradual restarts of refineries hit by Hurricane Ida.

** The weakening US RBOB-Brent crack set the tone in Asia in the week started Sept. 6, sources said. The US RBOB-Brent crack at 0230 GMT Sept. 6 fell 1.03% to $17.57/b, compared with the previous trading session.

** Asia's market participants eyed signs of demand rebound, as driving activity in Southeast Asia picked up following easing of some COVID-19-led movement restrictions. On Sept. 4, driving activity in Indonesia and Malaysia reached its highest since May, mobility data from Apple showed, with activity in Indonesia at 52% above baseline level, and in Malaysia at 9% below baseline.

** Demand recovery in South Asia was expected to support the Asian gasoline complex, sources said. State-owned Indian Oil Corp. sought up to 64,000 mt of 92 RON gasoline, in two equal parcels, for delivery over Sept. 20-21 to Paradip, and over Sept. 24-25 to Chennai and Paradip, in a tender closing Sept. 8, with same-day validity.

NAPHTHA

** Naphtha C+F Japan cargo fell $8.63/mt to $662.75/mt in midmorning trade Sept. 6, from Sept. 3 Asian close, as crude was lower.

** Brokers pegged front month October-November Mean of Platts Japan naphtha swap spread at $7.25/mt in midmorning trade Sept. 6, wider by 25 cents/mt from the previous session, S&P Global Platts data showed.

** Some supply tightness was expected from the US Gulf Coast -- a source of arbitrage naphtha -- as Hurricane Ida hurt refinery operations.

** The key ethylene-naphtha margin, tracked closely by steam cracker operators, climbed to a 13-week high, on tight ethylene supply. The CFR Northeast Asia ethylene and C+F Japan naphtha spread widened to $358.625/mt at the Asian close Sept. 3, up $54.875/mt week on week, Platts data showed. The spread was last higher on June 4 at $384.375/mt. The spread was above the typical breakeven level of $250/mt for integrated producers, and $300-$350/mt for non-integrated producers, and this was likely to keep steam crackers operating at maximum capacity, sources said.

** The cash differential for spot naphtha parcels with minimum 65% paraffin content gained $4/mt week on week to $4/mt Sept. 3, against benchmark Mean of Platts Japan naphtha physical on a CFR Japan basis, Platts data showed.

LPG

** Front-month Saudi Aramco October propane contract price swap was notionally indicated at $688/mt Sept. 6, down from $695/mt Sept. 3, but $23/mt more than the September term CPs.

** The October Saudi butane CP swap was indicated at parity to propane levels at the previous close.

** October-November CP propane swap contango was at $4.00/mt Sept. 6, compared with $2.00/mt in the previous session.

** LPG Persian Gulf to Japan freight eased, as rates moved below $42/mt Sept. 6, a level not seen since early August. On Sept. 3, the PG-Chiba rate was assessed at $43.50/mt. Weakening rates could spur demand for Persian Gulf barrels, sources said.

** East Asian propane demand could ease ahead of some PDH plants entering the next round of maintenance, sources said. Wanhua Chemical's PDH plant is due to shut for 30-45 days' maintenance in September, while Oriental Energy plans to shut its two PDH plants and three polypropylene plants in Ningbo in August.