Singapore—The Asian light ends market opened in mid-morning trade Feb. 8 on a mixed note, as gasoline and naphtha prices posted small gains on crude rise, while propane price edged lower following the tail-end of winter season.
Gasoline market was supported by lower Chinese exports while naphtha sentiment was weaker on narrowing petrochemical margins.April ICE Brent crude futures rose 43 cents/b from the 0830 GMT close on Feb. 5 to stand at $59.81/b at 0300 GMT Feb. 8.
GASOLINE** The March FOB Singapore 92 RON gasoline swap stayed firm at the start of the new trading week, inching up around 0.4% from the previous trading session to open at around $64.84/b, with optimism in international oil prices helping to buoy the motor fuel complex.
** Eyes this week will focus on Indonesia, which is due to lift partial movement restrictions in Java and Bali from Feb. 8 onwards. The easing of lockdown measures will raise gasoline demand from Indonesia, sources said, adding that sluggish driving activity since the start of the year has capped demand as the number of COVID-19 infections skyrocketed to record highs.
** Indonesia's state-owned Pertamina ahead of the lockdown easing, emerged late in the week ended Feb. 5 via spot tender, seeking one 500,000 barrel parcel of 92 RON gasoline for March 18-20. The tender will be awarded on Feb. 9, Platts reported earlier.
** Meanwhile, the influx of North Asian cargoes into the region is expected to slow later in the week as China celebrates Lunar New Year. The shorter month in February, celebration of the Lunar New Year holiday, as well as the strong domestic market have helped to rein in Chinese gasoline exports, which in turn has also lent support to Asian gasoline fundamentals, sources said.
NAPHTHA** The physical CFR Japan naphtha benchmark stood at $551/mt in early trade Feb. 8, up $1.25/mt from the Feb. 5 Asian close, boosted by gains in crude prices.
** Sentiment began to ease with front month March-April Mean of Platts Japan naphtha swap spread at $6.75/mt in mid-morning trade Feb. 5, according to brokers during mid-morning trade Feb. 8. This was 50 cents/mt lower than the Asian close Feb. 5 when it was $7.25/mt, Platts data showed.
** Decreased downstream margins weighed on sentiment, as the key spread between CFR Northeast Asia ethylene and CFR Japan naphtha physical was $300.25/mt at the Feb. 5 Asian close, a decrease of $2.25/mt day on day, Platts data showed. This is below the typical $350/mt breakeven point for non-integrated producers, but remains above the typical $250/mt breakeven point for integrated producers.
** A narrowing LPG-naphtha spread was being eyed by market participants, as LPG moved out of a seasonal heating demand period from winter. CFR North Asia propane 30-60 days forward cargo spread to C+F Japan naphtha was last assessed at $31.75/mt on Feb. 5, down drastically from $174.25/mt on Jan. 4, Platts data showed.
LPG** Front-month March CP propane swap was notionally indicated Feb. 8 at $589/mt, versus $593/mt valued Feb. 5.
** March propane/butane CP swap spread indicated at plus $13/mt, widening from $8/mt the previous session, as Chinese propane demand was expected to keep propane supported with return of propane dehydrogenation plants from maintenance and after Lunar New Year holidays in March, even as winter demand ebbs. Butane was still pressured by India's import pause.
** ADNOC is expected to announce acceptances of March-loading term nominations Feb. 11 followed by Saudi Aramco by Feb. 20, with eyes on whether Aramco would again cut loadings after Saudi Arabia's decision in January to limit February and March crude output.
** March/April CP swaps backwardation indicated at $51/mt versus $52/mt the previous session.
** Argus Far East Index propane swap -- reflecting Western arrival cargoes to Asia -- was indicated at $32/mt below Saudi CP swap for March, which reflects FOB Middle East tons. This showed Western cargoes were still more ample than Middle East supply in Asia, despite cancellations of February-loading US shipments.
