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ASIA OCTANE: Key market indicators for Aug 15-19

Asian gasoline demand is expected to soften in the week of August 15-19 as buying interest from Vietnam has been heard to be weak for the second half of August, market sources said.

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Vietnam's gasoline import demand in H2 August is expected to fall amid reports of ample inventories and weak driving activity, according to market sources.

Gasoline blending interest is also expected to soften as refineries from South Korea and Taiwan continue slashing run rates moving forward, prior to anticipated planned refinery turnarounds, market sources said.

However, gasoline blending interest is expected to see some support, as Sri Lanka's Sapugaskanda refinery is expected to restart operations as of August. 15, according to local media.

Naphtha

*The Asia naphtha market faced headwinds due to ample supply of cargoes offered from the Middle East and India amid lowered demand from end-users, sources said.

*Overall naphtha demand was weighed down as ASIA'S naphtha-fed steam crackers had cut run rates to about 80% overall for August 2022 and are mulling plant turnarounds due to low margins to make olefins from naphtha on waning demand for plastic derivatives from Asia's key consumer, China.

*The key spread between CFR Northeast Asia ethylene and CFR Japan naphtha physical spread was at $109.25/mt at the Asian close Aug. 12, narrowing $64.75/mt on the week, data from S&P Global Commodity Insights showed. The spread remains below the minimum breakeven level of $250/mt for integrated producers since May 13, making it unsustainable for producers to make naphtha.

*The reforming spread -- the difference between FOB Singapore 92 RON gasoline and Singapore naphtha derivative -- had widened by $9.05/mt on the week to $34.10/mt, S&P Global data showed. A widened spread shows that naphtha is more economically viable now as a gasoline blendstock but due to an overall fall in gasoline demand, naphtha demand for gasoline is likely to stay low.

*A deeper contango in the paper market reflected a bearish market sentiment, as the front month August-September Mean of Platts Japan naphtha swap time spread was at minus 50 cents/mt at the Aug. 12 Asian close, 50 cents/mt lower day on day, S&P Global data showed.

MTBE

*Demand for cargoes of MTBE over H2 August is expected to rise amid higher Malaysian buying interest, market sources said.

* Buying for late August and early September positions is likely to increase in the Market on Close as the market structure has flipped into backwardation.

*Traders say that the blending market demand in the Southeast Asia region has risen suddenly, with cargoes expected to head to Singapore. As a large parcel of toluene cargo was sold on a FOB China basis to a Singapore blender, there may be further buying of blendstocks, traders said. Currently, the FOB China MTBE offers are too high for export into Singapore.

Toluene

*Prices for toluene are expected to be supported by low availability of spot cargoes, as production levels on aromatic products remain low, industry sources said.

*Chinese domestic market also propped up prices higher despite lackluster demand from Southeast Asia and South Asia, sources added.

*Some market participants said that Thailand and South Korea continued to struggle with freight.

*Few cargoes were heard offered from South Korea, as many crackers were due for scheduled turnarounds in September, market sources said.

*"All crackers are having cuts," said a trader. "Thailand and Korea [South Korea] are struggling with freight. And lots of crackers going for maintenance shutdowns in September," said another trader, adding that there were hardly any cargoes being offered from South Korea.

Isomer-MX

*Demand for isomer-MX is expected to be supported by higher paraxylene profit margins downstream, market sources said.

*South Korea's GS Caltex plans to restart its 450,000 mt/year No. 1 paraxylene unit in Yeosu at the end of August after a scheduled maintenance that began end-June.

*A few market sources said the impending increase in PX supplies was a supportive factor for isomer-MX, causing the spread between PX and isomer-MX to narrow, market sources said.

Ethanol

*The Asian fuel ethanol market is expected to be supported by bullish stocks and falling production in the US.

* US ethanol production slid to 1.22 million b/d for the week to Aug. 5, down 21,000 b/d from the previous week. Total stocks also dropped to 23.256 million barrels, lower by 138,000 barrels, according to US Energy Information Administration's weekly stocks and production report released on Aug. 10.

*Platts Bioethanol CIF Philippines was assessed at $768.33/cu m on Aug. 12, up from $736.33/cu m on Aug. 5, S&P Global data showed.

Product
Aug-12
W-o-W Change
RON
Price per Ron ($/mt)
Price per Ron ($/cu m)
GASOLINE
FOB Singapore 91 RON non-oxygenated
$112.59/b
9.90%
91
NA
NA
FOB Singapore 92 RON oxygenated
$110.19/b
10.13%
92
FOB Singapore 95 RON oxygenated
$113.6/b
9.58%
95
FOB Singapore 97 RON oxygenated
$115.38/b
9.38%
97
BLENDSTOCKS
null FOB Singapore Naphtha
$73.47/b
0.63%
72
13.77
11.90
FOB Korea Toluene
$905/mt
-0.44%
115
-1.37
4.52
FOB Singapore MTBE
$1053/mt
10.61%
115
5.06
4.58
FOB Korea Isomer-MX
$1023/mt
7.01%
113
4.11
10.27
CIF Philippines Ethanol
$768.33/cu m
4.35%
118
1.31
3.61