ASIA OCTANE: Key market indicators for June 27-July 1

Asian gasoline and its octane boosting blendstocks have firmed due to the peak summer driving season, which was expected to continue supporting demand for the week of June 27-July 1, sources said.

Overall prices of gasoline and its blendstocks dipped during the week ended June 24, mainly due to a fall in crude prices and the high costs deterring buying interest, sources said.

Signaling softer demand for higher octane gasoline, Platts FOB Singapore inter-RON spread for 92 RON and 95 RON gasoline grades fell from $7.47/b on June 20 to $6.58/b on June 24, data by S&P Global Commodity Insights showed.

However, the gasoline market was still firm as the physical crack spread for FOB Singapore 92 RON gasoline cargo against ICE Brent futures stood at $36.22/b at the Asian close June 24, up $5.01/b week on week, S&P Global data showed.

Naphtha

** Asian naphtha has begun to recover as some demand for cracker-feed naphtha emerged last week with two spot tenders from South Korea and two term tenders concluded from Taiwan. However, overall sentiment was still bearish on unhealthy olefin margins, sources said.

** The CFR Northeast Asia ethylene and CFR Japan naphtha physical spread was at $161.50/mt at the Asian close June 24, and it has been below the typical breakeven spread of $250/mt for integrated producers since May 13, S&P Global data showed.

** Naphtha supply remained long, with at least 135,000 mt of naphtha offered via tenders heard issued from the Middle East and India in the week ended June 24.

** Platts Singapore reforming spread narrowed 78 cents/b week on week to $59.82/b June 24 on a recovery in the naphtha crack, S&P Global data showed. The reforming spread was still elevated in comparison with the May average of $41.60/b, and the June 1-25 average of $57.81/b.

MTBE

** Asian MTBE was expected to be volatile this week on lingering uncertainties in the energy complex amid steady gasoline blending demand during the summer driving season in northern hemisphere, sources said.

** Strong demand for arbitraged MTBE from Europe and the US is expected to bolster Asian MTBE prices, however, rising MTBE supplies on better netbacks between local MTBE and FOB Singapore MTBE prices is likely to add some downward pressure.

** China's MTBE exports to Singapore surged to a record high 45,291 mt in May, Enterprise Singapore data released June 20 showed, as the FOB Singapore MTBE price surged on peak summer demand and the Russia-Ukraine war, while gasoline blending in China slumped amid COVID-19 lockdowns in Shanghai.

** China's weak domestic gasoline blending demand and the open arbitrage window on paper to Singapore, Europe and the US have boosted Chinese MTBE exports in the first half of 2022, but the trend is likely to change in H2 amid a rebound in the local MTBE price.

Toluene

** Mismatched demand and supply fundamentals in Asia to see firmer prices in Northeast Asia and lower prices in Southeast Asia and South Asia this week, trading sources said.

** Asian toluene prices will likely be mixed this week, with buyers from South Korea still persistent, while supplies are mainly from China, industry sources said.

** Demand from India and Southeast Asia have been lackluster amid overall high costs and end-users have been comfortable with supplies arriving for June, sources said.

Isomer-MX

** Asian Isomer-MX was expected to be driven by gasoline demand this week, after Platts assessed FOB Korea at $1,249/mt June 24, slightly higher than $1,246.50/mt FOB Korea on June 17, S&P Global data showed.

** Demand from the US Gulf Coast is expected to taper off, but demand from Singapore could pick up as MTBE has become expensive for blending purposes, sources said.

** FOB Korea paraxylene-MX spread had narrowed to minus $19.17/mt June 24, down $52.17/mt week on week, S&P Global data showed, rendering MX an unattractive feedstock for paraxylene.

Ethanol

** Philippines buyers may come to market this week to purchase for Q4 should US ethanol prices continue on a downtrend amid bearish economic sentiment globally. However, thin fuel ethanol supply and volatile freight rates would likely provide support to prices, limiting the overall price movement.

** Gasoline levels remain elevated in the Philippines at Pesos 80s/liter, S&P Global data showed. Sources indicated prices are likely to stay at current levels for some time despite the country's central bank's decision to raise key interest rates by 25 basis points on June 23.

** Platts assessed bioethanol CIF Philippines at $818.33/cu m June 24, down $40.34/cu m week on week, with US ethanol futures tumbling alongside weaker feedstock prices, S&P Global data showed.

Source: S&P Global Commodity Insights data