13 Dec 2021 | 05:45 UTC

Asia octane: Key market indicators for Dec 13-17

Highlights

Asian naphtha activity for first-half February delivery into North Asia is slated to begin during the week, as the trading cycle rolls forward Dec. 16.

The sentiment in the Asian naphtha market has been bearish amid increasing Western arbitrage supply and low LPG prices that have dampened demand.

Naphtha blendstock demand was expected to firm during the week, as the reforming spread -- the difference between Singapore 92 RON gasoline and Singapore naphtha derivative -- grew 87 cents/b week on week to $8.70/b at the Asian close Dec. 10, hitting a six-week high, S&P Global Platts data showed. The spread was last higher at $9.56/b Oct. 29. A wider spread makes it economically viable for gasoline producers to use naphtha as a blendstock.

Downstream weakness narrowed the key paraxylene CFR Taiwan/China marker and the C+F Japan naphtha cargo spread by $14.30/mt on the week to $129.21/mt Dec. 10, Platts data showed. It was still below the typical breakeven of around $280-$300/mt and likely to keep run rates at splitters low, sources said.

Trading was dull for Asian octane blendstocks at the start of the week Dec. 13, due to bearish sentiment in the naphtha, toluene, and isomer-grade mixed xylene markets. The market was held up by the Asian MTBE complex, which was expected to move in line with firm gasoline and crude oil markets.

ICE February Brent crude futures were at $76.13/b at 12:30 pm Singapore time Dec. 13, up $1.87/b, or 2.52%, from the Asian close Dec. 10.

Naphtha

MTBE

  • The Asian MTBE market is expected to rebound on the back of firm gasoline and crude oil markets, as omicron coronavirus variant fears fade, and the US dollar weakens.
  • Market discussions were tepid amid the year-end trading lull and ongoing 2022 MTBE term contract negotiations.
  • The CFR Malaysia MTBE term contracts for 2022 were heard settled at about a $10s/mt premium to Mean of Platts FOB Singapore assessments. The differentials signed for 2022 were slightly lower, compared with the contracts for 2021 term cargoes, which were at about an $18/mt premium to MOPS.

Toluene

  • Poor demand and thin discussions continued to dampen the trade momentum in the Asian toluene market.
  • High inventories in India and China had deterred participants from further purchases.
  • Toluene spread to naphtha continued to tread on a thin line, closing in a single digit range of $1.88/mt Dec. 10, down $28.25/mt on the week, Platts data showed.

Isomer-MX

  • A sluggish paraxylene market and weak gasoline blending demand had slowed the Asian isomer-MX market.
  • Isomer-MX spread to naphtha was under pressure, closing in a single digit range of $7.80/mt Dec. 10, down $29.25/mt on the week, Platts data showed.

Ethanol

  • US ethanol delivered to the Philippines fell to $767/cu m Dec. 10, from $769.67/cu m Dec. 3.
  • US ethanol production for the week ended Dec. 3 averaged 1.090 million b/d, up 55,000 b/d on the week and 99,000 b/d on the year, Energy Information Administration data showed Dec. 8.
  • A source said that the Philippines' gasoline demand was around 80% of the pre-COVID-19 level, with economic activity recovering post the lifting of mobility restrictions.
  • Domestic ethanol in the Philippines was priced above Peso 60/l, and ethanol producers in the country were heard making enough for consumption. Oil companies had largely completed their first-quarter purchase of imported ethanol, with second-quarter purchase set to begin late January or February.
  • An offer was heard at $870/cu m CFR Philippines for February and March shipment.
Product
Dec-10
W-o-W Change
RON
Price per Ron ($/mt)
Price per Ron ($/cu m)
GASOLINE
FOB Singapore 91 RON non-oxygenated
$87.71/b
7.58%
91
NA
NA
FOB Singapore 92 RON oxygenated
$86.71/b
7.67%
92
FOB Singapore 95 RON oxygenated
$89.31/b
7.60%
95
FOB Singapore 97 RON oxygenated
$90.31/b
6.98%
97
BLENDSTOCKS
null FOB Singapore Naphtha
$77.59/b
4.39%
72
1.94
3.49
FOB Korea Toluene
$705/mt
1.44%
115
-1.39
3.29
FOB Singapore MTBE
$795/mt
7.72%
115
2.52
2.52
FOB Korea Isomer-MX
$711/mt
2.75%
113
-1.24
4.19
CIF Philippines Ethanol
$767/cu m
-0.35%
118
8.92
9.09