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Asia Octane: Key market indicators this week

  • Author
  • Staff
  • Editor
  • Aastha Agnihotri
  • Commodity
  • Agriculture Oil Petrochemicals

Singapore — The Asia octane market is likely to remain soft in week ending May 22, continuing the downtrend as Singapore gasoline prices fell the previous week, amid a worsening coronavirus outbreak in Asia leading to further lockdowns, sources said.

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The market is also watching the impact of China's levy of consumption tax from June 12 on mixed aromatics, light cycle oil and bitumen blend imports, which could likely see China's import of gasoline blend component mixed aromatics dry up, leaving more blendstocks available in Singapore, sources said.

Naphtha

** Buying activity is slated to begin for H1 July delivery cargoes into North Asia week starting May 17.

** Ample supply of naphtha along with weaker demand from the gasoline blending sector due to fresh coronavirus outbreaks in Asia weighed on sentiment -- the backwardation structure narrowed to a three-week low. Front month June-July Mean of Platts Japan naphtha swap fell $1.25/mt week on week to $4/mt at the May 14 Asian close, Platts data showed.

** The Singapore reforming spread -- the price difference between Singapore 92 RON gasoline and Singapore naphtha derivative -- crunched over the week ended May 14 due to weakness in gasoline, reaching $8.35/b at the Asian close May 14 -- a week on week decrease of $1.81/b, Platts data showed.

MTBE

** Asian MTBE is expected to remain on a downtrend, hit by heavy sell-off amid weaker market sentiment. The FOB Singapore marker hit a near seven-week low at $692/mt on May 14.

** The second wave of COVID-19 pandemic in India and other Asian countries is expected to cloud the previous upbeat sentiment in the gasoline blending market.

** The MTBE gasoline blending value stood at around $90.6895/mt as of May 14, up from $76.82/mt May 7, bolstered by the crash in MTBE prices, S&P Global Platts data showed.

Toluene

** Trading sentiment in the Asian toluene market will likely remain precarious in the week that began May 16, as gains in the oil market are likely to support aromatics prices amid an otherwise weak demand in Asia from the solvents and gasoline-blending sector.

** While the key FOB Korea toluene marker fell $10/mt through the week to close at $765/mt May 14, from $775/mt May 10, the price softness has led to healthier US-Korea arbitrage opportunities, market sources said.

Isomer-MX

** East China domestic MX inventories were down 22.08%, or 13,800 mt, week on week at 48,700 mt on May 14, as MX supply remains limited for the time being.

** Asia PX-MX spread narrows $12/mt over the week to $57.67/mt on May 14, and MX-naphtha spread shrinks $12.25/mt to $177.25/mt.

Ethanol

** The Asia ethanol market is expected to soften as corn values took a hit due to a rise in US corn stocks estimates, according to the WASDE report, causing a retreat in US ethanol prices.

** The Department of Agriculture's WASDE report showed US corn stocks at the 2021-22 year-end estimated at 1.507 billion bu, up 250 million bu from last year's levels, the USDA said.

** US ethanol production averaged 979,000 b/d in the week ended May 7, 27,000 b/d higher on the week and 362,000 b/d higher on the year, Energy Information Administration data showed May 12.

** In the Philippines, offers were reported between $780 to over 900/cu m CFR with no buying interest showed in a short week.