Asia light ends - Key market indicators this week

Singapore — Asian light ends market rose in mid-morning trade Nov. 23, supported by firmer crude oil prices amid market optimism over the pace of development of COVID-19 vaccines as well as reluctance of the Biden Administration to impose a nationwide lockdown.

Nonetheless, sentiment in Asian gasoline remained weak on expectations of more Chinese exports following the award of a third round of product export quotas to Petrochina, Zhejiang Petroleum & Chemical, and Norinco over the weekend, sources said.

Naphtha demand is curbed by steam cracker outages, but sentiment could see a temporary lift as end-users seek more second-half January delivery cargoes in the week of Nov. 22.

January ICE Brent crude futures climbed 77 cents/b from the Nov. 20 Asian close to stand at $45.04/b at 0300 GMT Nov. 23.

GASOLINE

** The December FOB Singapore 92 RON gasoline swap opened Nov. 23 at around $46.30/b, 1.03% higher than the previous trading session, on higher crude prices.

** Despite higher outright prices, sentiment in the Asian gasoline market was mired in bearishness on supply concerns. Industry participants will be eyeing possibly higher exports from both Chinese private and state-owned refiners, who received the third round of oil export quota late in the week ended Nov. 21.

** China's Ministry of Commerce allocated 1.95 million mt of oil product export quotas to Petrochina, 1 million mt for Zhejiang Petroleum & Chemical, and 50,000 mt for Norinco. While Norinco's quota will only be used to export gasoil, Petrochina and ZPC will likely use their quotas to export some gasoline, market sources said.

** Separately, on the demand end, Indonesia Pertamina has issued its third buy tender for 92 RON gasoline. The tender, which will close Nov. 24, seeks an additional minimum of one 500,000-barrel cargo per month of 92 RON gasoline for delivery either to Merak, Balongan, Tuban or multi-port over January to June 2021. The state-owned oil and gas firm had already sought a total of 1.19 million barrels of 92 RON gasoline in two separate tenders that closed in the week ended Nov. 21, S&P Global Platts reported previously.

NAPHTHA

** The physical CFR Japan naphtha benchmark opened Nov. 23 at $394.375/mt, up $4/mt from the Nov. 20 Asian close amid higher Brent crude.

** Overall sentiment saw an uptick on expectations of more end-users buying activity for first-half January delivery cargoes in the week of Nov. 22.

** The front month December-January MOPJ naphtha swap contango narrowed to $3/mt in mid-morning trade Nov. 23, based on broker indications, compared with minus $3.75/mt at the Nov. 20 Asian close, Platts data showed.

** Steam cracker outages had weighed on naphtha demand but had tightened supply in the ethylene market. The spread between CFR Northeast Asia ethylene and CFR Japan naphtha physical rose $26/mt day on day to the highest in more than 20 months to $564.625/mt at the Nov. 20 Asian close. The spread was last higher on March 5, 2019, at $567.50/mt, Platts data showed. The typical breakeven spread for non-integrated producers is $350/mt, and $250/mt for integrated producers, sources said.

LPG

** Front-month December CP propane swap was notionally indicated at $438.50/mt Nov. 23, compared with the $426/mt valued on Nov. 20. Butane CP swap was indicated $12/mt above propane.

** December-January CP propane swap contango was indicated at $14/mt versus $12.50/mt the previous session, and January-February at $10/mt Nov. 23 from $9.50/mt Nov. 20.

** December CP propane-butane spread narrowed to minus $12/mt Nov. 23, from minus $13/mt the previous trade session amid tighter supply of propane after Saudi Aramco announced acceptance of December-loading term LPG nominations with cuts to propane tolerance in the loadings and two cancellations. Sources said this could be due to domestic demand pull for the product in Saudi Arabia.

** Front-cycle second-half December CFR North Asia LPG premium has fallen and is set to weaken further on the back of heavy inflow of US cargoes to Asia, with December arrivals estimated at around 2.7 million mt, traders said.

** Chinese importers are expected to conclude discussions with suppliers for 2021 term cargoes in the week of Nov. 22.