Asia light ends - Key market indicators this week

Singapore — Asia's light ends markets opened Nov. 16 on a mixed note, as gasoline sagged under the weight of a well-supplied regional market, while naphtha firmed as the market moved to track the H2 January and H1 February cycles where demand is likely stronger.

Asian LPG market participants are awaiting Saudi Aramco's acceptances of December-loading term nominations by close of the week ended Nov. 20.

Front month January ICE Brent crude prices edged up to $43.19/b at 0300 GMT Nov. 16, from $43.14/b at the Asian close on Nov. 13.

GASOLINE

** The December FOB Singapore 92 RON gasoline swap opened Nov. 16 at around $44.93/b, falling 15 cents/b from the Nov. 13 Asian close, shrugging aside marginally higher Brent crude markers due to the slightly weaker US RBOB-Brent crack spread.

** Sentiment will likely stay subdued this week, amid concerns of oversupply following a string of tenders offering spot cargoes in the market last week. According to open tenders seen by Platts, a total of around 192,823 mt of spot gasoline was offered from regional refiners over Nov 9-13, up from the 119,000 mt offered over Nov 1-6.

** On the demand end, participants are anticipating the lifting of Jakarta's Large-Scale Social Restrictions, or PSBB. The PSBB policy in the Indonesian capital is slated to be lifted on Nov. 22, but with COVID-19 cases still on the rise, there are concerns restrictions may be extended for the second time.

** Nevertheless, this week participants will gear up to submit their offers for two major term tenders, both of which would help secure traders' outlets in 2021. Offers for Indonesian Pertamina's term tender will be keenly watched, with the state-owned company seeking a minimum total of 2.38 million barrels each month of 92 RON and 88 RON gasoline over first-half 2020. Indonesia is Southeast Asia's largest buyer of gasoline, with its import appetite typically setting the tone in the region.

** The second term tender, from Taiwan's Formosa Petrochemical Corp, is for a total of 135,000 mt of 99 RON reformate for delivery over January-December 2021. Offers for Pertamina's tenders are to be submitted over Nov. 18-19, while offers for Formosa's tender must be in by Nov. 17.

NAPHTHA

** The physical CFR Japan naphtha benchmark opened Nov. 16 at $379.375/mt, up $4.75/mt from the Nov. 13 Asian close, as the market rolled forward by half month, tracking the firmer H2 January and H1 February cycles, amid marginally higher Brent crude.

** However, the market remained under pressure from prompt supply length. Front month December-January MOPJ naphtha swap timespread remained in a contango in mid-morning trade Nov. 16, as brokers pegged it at minus $3.75/mt. This was slightly higher than the near six-month low of minus $4/mt at the Nov. 13 Asian close. It was last lower May 18 at minus $4.25/mt, Platts data showed.

** The CFR Japan naphtha physical crack against front-month ICE Brent crude futures fell to a three month low of $51.075/mt on Nov. 13 Asian close, down 55 cents/mt day on day, Platts data showed. The crack was last lower on Aug. 3 at $49.95/mt, Platts data showed.

** Results for January to December 2021 term contract negotiations by Japan's Mitsui Chemicals for CFR Chiba and by South Korea's YNCC for CFR Yeosu are expected this week.

** Asian end-users are expected to start purchasing for the H1 January delivery cycle this week, where import appetite is likely to be stronger than December as South Korea's YNCC restarts from planned turnaround and debottlenecking.

LPG

** Front month December CP propane swap was notionally indicated at $445/mt Nov. 16, compared with the $447.50/mt valued on Nov. 13. Butane CP swap was indicated $12/mt above propane, unchanged from Nov. 13.

** December-January CP propane swap contango was indicated at $12/mt versus $11.50/mt the previous session and January-February at $12.50/mt Nov. 16.

** Saudi Aramco will announce acceptances of December-loading term nominations by end-week, after ADNOC's acceptances last week saw some delays in butane loading dates to other lifters to meet Indian term demand. The market is awaiting whether Saudi acceptances would help to restore the region's butane balance and narrow its premium to propane.

** Front cycle CFR North Asia shifts to H2 December delivery with market expecting spot trade to pick up after late last week's lull, as the region is poised for a cold winter.

** Regional demand led by Chinese PDH plants cranking up production, though North Asian crackers continue to rebuff LPG as alternate feedstock as naphtha remained almost $73/mt below propane.