Asian light ends - Key market indicators this week

Singapore — The Asian light ends markets opened Sept. 21 slightly lower than the Asian close Sept. 18, tracking small losses in the crude oil complex.

November ICE Brent crude futures fell slightly from $43.49/b at the Asian close on Sept. 18 to $43.16/b at 0300 GMT Sept. 21.

Overall, light ends market sentiment held firm with gasoline buoyed by additional demand from Indonesia, while naphtha is expected to be supported by Northwest Europe market strength. LPG is buoyed by spot demand from India and expectations of a rebound in Chinese demand.

GASOLINE

** October Singapore 92 RON gasoline swap opened Sept. 21 at around $47.95/b, sliding marginally by 0.76% from $48.32/b at the Asian close Sept. 18, tracing a dip in international crude prices.

** Notwithstanding the lower open, the Asian gasoline market is poised to be supported this week, with faltering middle distillate margins increasing expectations of more refinery run cuts in the near term. The slashes to refinery run rates are expected to crimp regional gasoline supply, tightening the availability of prompt cargoes.

** Indonesian state-owned Pertamina's term contract seeking additional gasoline over October-December bolstered market sentiment. The tender, which sought a total 1.64 million barrels of 88 RON gasoline per month, closes on Sept. 21, with offers to remain valid until Sept. 25.

** Vietnam's Petrolimex will similarly be closing a buy tender for 30,000 mt of either 90 RON or 92 RON gasoline and 30,000 mt of 95 RON gasoline on Sept 21. Driving activity in Vietnam as of Sept. 16 stood at 2% below baseline levels, according mobility data from Apple, staying on a recovery trajectory amid steady easing of new lockdown measures in cities such as Da Nang and Ho Chi Minh.

NAPHTHA

** The physical CFR Japan naphtha benchmark opened Sept. 21 at $409.625/mt, down $2.50/mt from the Asian close on Sept. 18, due to lower crude.

** The CFR Japan naphtha physical crack spread against front month ICE Brent crude futures rallied to a year-to-date high of $85.95/mt Sept. 18, up 72.5 cents/mt day on day and $2.825/mt week on week, tracking a firmer Northwest Europe naphtha crack, S&P Global Platts data showed.

** Firmer sentiment was reflected in the derivatives market in mid-morning trade, with the front month October-November Japan naphtha swaps spread at plus $2/mt, up from $1.75/mt at the Sept. 18 close.

** Purchasing for H1 November delivery naphtha was expected to kick off after a dearth of activity in the week ended Sept. 18.

LPG

** Front month October CP propane swap notionally indicated Sept. 21 at $371/mt, versus $371.5/mt valued Sept. 18. Butane CP swap indicated $2/mt above propane.

** October-November CP propane swap contango indicated at $10/mt, versus $8.5/mt the previous session.

** More than a week before Saudi Aramco announces October term contract prices, swaps indicate a recovery in October propane monthly CP is in sight -- after holding steady for September -- and butane might see a third-straight increase.

** Middle East supply balanced between some cuts in Saudi October term acceptances, while ADNOC's and Qatar's are in line with nominations, even as Kuwait continues to offer spot cargoes.

** Indian demand recovery on track with state-run IOC and BPCL issuing import tenders of mixed cargoes for November delivery. Chinese demand expected to rebound as new PDH plants start end-October, while steady US supply is expected to meet fresh requirements.

** After a pause, petrochemical demand for LPG is being watched, as propane's discount to naphtha widens to $26.5/mt.