Singapore — The Asian light ends market rose in mid-morning trade on April 5, supported by stronger crude benchmarks amid recovery in oil demand.
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Asia gasoline is underpinned by unplanned refinery outages in Indonesia and Japan, amid a pick up in driving activity in many parts of Asia while naphtha sentiment is waning as Western supply flows resumed in lieu of the unblocking of the Suez Canal, sources said.
The Middle East LPG market remained well supplied with Qatar Petroleum heard making no cuts, delays or advancements in its acceptances of May loading term cargo nominations.
Front-month June ICE Brent crude futures rose $1.59/b from 0430 GMT April 1 to stand at $64.47/b at 0300 GMT April 5. Singapore was closed for Easter holiday on April 2.
** The May FOB Singapore 92 RON gasoline swap rose in early April 5 trading, opening 2.59% higher from the previous session at around $71.37/b, as US RBOB-Brent crack as well as crude prices ticked higher in line with optimism over a wider oil demand recovery.
** The Asian gasoline in the week of April 4 will see bullishness continue to stem from unexpected refinery outages, sources said. Indonesia's 125,000 b/d Balongan refinery as of early April 4, remained offline while investigations were ongoing after a three-day long fire was put out mid-last week. Japan ENEOS' 127,500 b/d Wakayama refinery is also offline after a fire March 29. The Wakayama refinery outage has tightened regional supply of non-oxygenated gasoline, leading buyers of the grade to seek alternate supply, sources said.
** Continued demand recovery across Asia will provide further upside. Malaysia, Australia, New Zealand and Vietnam have seen driving activity, a proxy for gasoline demand, return above baseline levels as of March 29, while other Southeast Asian countries such as Thailand and Indonesia trail closely behind at their respective multi-month high levels, according to Apple mobility data.
** That said, some headwinds to Asian demand remain, especially as fresh lockdowns are imposed in India, particularly in the state of Maharashtra and the districts of Nagpur, Amravati and Akola. The lockdowns are aimed at curbing a new wave of COVID-19 infections across the country. On April 3, India reported 93,249 new cases of the virus, the highest since the peak in September 2020, John Hopkins University data showed.
** The physical CFR Japan naphtha benchmark stood at $576.76/mt in early trade April 5, up $14.76/mt from the Asian close April 1, due to a rebound in crude prices.
** Sentiment was softer with front-month May-June Mean of Platts Japan naphtha swap spread at $4.75/mt in mid-morning trade April 5, according to broker indications. This was 25 cents/mt lower than the April 1 Asian close, when it was at $5/mt, Platts data showed.
** The Asian naphtha market has begun to see weaker sentiment as Western supply flows resumed following the unblocking of the Suez Canal -- this has weighed on the Asia naphtha physical crack against ICE Brent crude futures, which fell to $90.40/mt on April 1, down $1.825/mt day on day, Platts data showed.
** The key spread between CFR Northeast Asia ethylene and CFR Japan naphtha physical was last at $498/mt on April 1, which is well above the $350/mt breakeven spread for non-integrated producers, Platts data showed. Looking downstream, polyethylene-naphtha margin also remained comfortably above the typical breakeven of $450/mt, as the HDPE film CFR Far East Asia spread to CFR Japan naphtha physical was at $638/mt on April 1, Platts data showed.
** Front-month May CP propane swap notionally indicated April 5 at $519/mt, versus $511/mt assessed April 1.
** May-June CP propane swap backwardation indicated at $18/mt April 5, versus $20/mt previous session.
** Middle East market looks well supplied with spot cargoes. Qatar Petroleum has announced acceptances of May-loading term cargo nominations, with some saying there were no cuts, delays or advancements. ADNOC's announcement due week starting April 12.
** Premium of propane to butane, which was at $30/mt for the April term CPs, indicated at $20/mt for May CP swaps on April 5, as Indonesia
heard to have bought by tender a 44,000 mt evenly split cargo for May 18-20 delivery, CFR basis, helping to ease the butane backlog amid India's absence from spot market.
** US LPG loading for Asia set to continue improving after weather disruptions in February, though worries over thick fog persisted. While talk of cancellations emerged, nothing has been reported, while vessel availability seen tight, pushing up freight rates, sources said.