Asia light ends - Key market indicators this week

Singapore — Asian light end markets opened steady to slightly firmer in mid-morning trade Nov. 9, amid a steady Brent crude complex.

Front-month January ICE Brent crude futures was largely unchanged from the Nov. 6 Asian close to stand at $40.54/b at 0300 GMT Nov. 9.

Asian gasoline is expected to be volatile amid the US election, and continued lockdowns in the West and Asia, while LPG market participants await acceptances of December-loading term nominations from ADNOC and Saudi Aramco.

Naphtha is set to stay soft this week following the unplanned outage at South Korea's LG Chem's fire-hit steam cracker in Yeosu on Nov. 5.

WATCH: Market Movers Asia, Nov 9-13: Markets digest US election results, assess potential impact of Biden win on US-Asia trade

Gasoline

** The December FOB Singapore 92 RON gasoline swap opened Nov. 9 at around $43.05/b, rising 0.30% from the previous trading session on a combination of unchanged crude oil prices as well as a steady US RBOB-Brent crack.

** Sentiment is set to be volatile this week, as the market awaits further cues from the US election. Eyes are on the possible policies of Joe Biden, and legal challenges raised by US President Donald Trump.

** Sentiment will also be affected by developments related to the ongoing coronavirus pandemic in the US, which saw 102,726 new cases on Nov. 8. US gasoline demand is expected to stay weak as a result of the pandemic, further exacerbating seasonal weakness heading into winter. The US RBOB-Brent crack, as of 0230 GMT Nov. 9, was seen at $6.07/b, a marginal 1.87% day-on-day rise.

** Asia demand is expected to stay lackluster with Malaysia expanding its conditional movement control order (CMCO) for the second time. The CMCO, which is currently imposed in nine of the country's 13 states, will only be lifted on Dec. 6, according to a Nov. 7 announcement by Prime Minister Muhyiddin Yassin.

Naphtha

** The physical CFR Japan naphtha benchmark opened Nov. 9 at $367.625/mt, edging up 25 cents/mt from the Nov. 6 Asian close, amid largely steady crude prices.

** Eyes are now on whether South Korea's LG Chem will offer distressed naphtha cargoes following the unplanned outage of its fire-hit Yeosu steam cracker on Nov. 5. The shutdown, expected to be around three weeks for now, will translate to a demand loss of around 200,000 mt, sources said. The cracker can produce 1.18 million mt/year of ethylene.

** The December/January Japan naphtha swap spread was pegged at minus $3.75/mt at 0300 GMT Nov. 9, down from minus $3/mt at the Nov. 6 Asian close.

** Olefin margins are expected to climb this week, as LG Chem's cracker and butadiene plant outages tightened the supply of olefins while weakening naphtha demand at the same time. The Asia butadiene-naphtha spread widened to a 26-month high of $882.625/mt Nov. 6, up $128.50/mt day on day.

LPG

** Front-month December CP propane swap was notionally indicated Nov. 9 at $444/mt compared with $441.5/mt on Nov. 6. The butane CP swap was indicated $5/mt above propane, narrowing from $7/mt Nov. 6.

** The December/January CP propane swap contango was indicated at $11/mt versus $10/mt in the previous session with January/February at $11/mt on Nov. 9.

** ADNOC will announce acceptances of December-loading term nominations later this week, followed by Saudi Aramco next week.

** Eyes are on any impact Hurricane Eta would have on LPG production and shipments to Asia in November from the US Gulf and on Panama Canal operations.

** With firm Chinese PDH demand for propane, any supply disruption of propane-heavy US cargoes could support propane and narrow its discount to butane, amid rising US propane prices.

** North Asia winter forecasts have been mixed, with average to above-average temperatures expected from November to early December, turning colder in January-February. But stocks in Japan and South Korea have been built up in advance, while a persistently backwardated market could prompt importers to phase out purchases, sources said.