Asian gasoline and naphtha prices opened higher Aug. 11, driven by higher crude prices underpinned by a firmer demand outlook.
Demand emerged for gasoline from Indonesia and the Middle East, while buying for H2 September naphtha will move into full swing this week.
Middle East LPG is under pressure with ADNOC and Qatar seen advancing loading dates for term September cargoes to some buyers amid ample supply and deep discounts.
October ICE Brent crude futures stood at $45.18/b at 0300 GMT Aug. 11, up from $44.75/b at 0830 GMT Aug. 7. Singapore was closed for a public holiday Aug. 10.
GASOLINE
** The September FOB Singapore 92 RON gasoline swap opened Aug. 11 at around $47.25/b, edging up 0.74% from the Aug. 7 Asian close, as an improved demand outlook for global oil markets propped up the crude complex.
** Sentiment in the Asian gasoline market is expected to remain supported this week as cargoes fixed to head toward Indonesia are due to be loaded. Traders are keeping an eye on potentially extra prompt end-August requirements from state-owned Pertamina for 92 RON gasoline in particular, which may further underpin the market.
** Demand for non-oxygenated gasoline from Australia, the Philippines and even Japan remained uncertain amid struggles to contain the spread of a second wave of coronavirus cases.
** Signs of demand recovery in the Persian Gulf have injected more positive sentiment, sources noted. State-owned Kuwait Petroleum Corp is seeking 30,000 mt of 91 RON gasoline for delivery over Aug. 31-Sept. 1 in a tender that closes Aug. 11, the first time the state-owned company has been seen in the spot market since March.
NAPHTHA
** The CFR Japan naphtha physical benchmark opened Aug. 11 notionally at $397.625/mt, up $5.75/mt from the Asian close Aug. 7, underpinned by stronger crude prices.
** The September/October Japan naphtha swap spread widened 25 cents/mt from the Asian close Aug. 7 to plus 25 cents/mt in mid-morning trade Aug. 11, steady to slightly firmer amid a stable European naphtha market.
** Buying activity for H2 September naphtha is expected to ramp up this week after South Korea's YNCC and Japan's Showa Denko bought last week at lower cash differentials amid anticipation of more supply from arbitrage barrels flowing in from Europe for September arrival, sources said.
** The market is focused this week on the outcome of CFR Northeast Asia term talks for 2021, which will set the tone for 2021 term renewal discussions by other petrochemical producers. Taiwan's Formosa Petrochemicals is seeking naphtha for October 2020-September 2021 delivery, while South Korea's YNCC is seeking term naphtha for January-December 2021 delivery. Both are expected to complete their term discussions this week.
LPG
** The front month September CP swap was notionally indicated Aug. 11 at $372/mt, versus $371.50/mt on Aug. 7.
** Traders expect the Middle East market to remain under pressure this week, with FOB AG discounts hovering in the $20s-$30/mt range to the CP, as healthy Middle East supplies continue to jostle with ample US arrivals for slowly recovering Asian demand.
** ADNOC announced acceptances of September loading LPG nominations Aug. 10 with no cuts and some getting advanced dates. This followed Qatar's acceptance last week that also saw some advancements.
** Saudi acceptances of September nominations expected early next week, forecast without cuts. The market was expecting some increase in exports on supply of deferred cargoes.
** Chinese demand was seen recovering slowly amid high stocks, even as two new PDH plants started up in July.
** Ningbo Kingfa bought eight 23,000 mt propane cargoes for February, April, May and July/November 2021 deliveries from another Chinese trader at CP plus high teens to $20/mt.
** Wanhua Chemical is reviewing offers into its import tender for twelve 44,000 mt propane cargoes for January-December 2021 delivery, sources said.
** The September/October CP propane swap was notionally indicated Aug. 11 at $5/mt in backwardation, from $4/mt Aug. 7.
