Singapore—The Asia light ends market opened the week of March 22 on a mixed note, with naphtha and gasoline posting small increases buoyed by crude, while LPG fell.
Asia gasoline was tracking weaker markets in the west as there is thin demand in Asia amid COVID-19 pressures, while naphtha demand is set to weaken as Asian steam crackers switch a portion of feedstock to LPG.Propane demand remained strong on Chinese PDH plant buying but butane has been sluggish amid lull in India and Indonesia demand.
Front-month May ICE Brent crude futures rose to $64.46/b at 0300 GMT March 22, from $63.61/b at the Asian close March 19.
GASOLINE** The April FOB Singapore 92 RON gasoline swap opened the week on a relatively steady note, edging up 0.1% from March 19 to be pegged around $69.71/b at 0250 GMT March 22, as continued weakening of the US RBOB crack capped the rise in Asia gasoline following a strengthening of the crude complex.
** The RBOB-Brent crack hit three-week lows in US trade on March 19 amid concerns of COVID-19 resurgence in the US. The crack was pegged at around $17.08/b at 0250 GMT March 22, down from $18.35/b at the 0830 GMT Asia close March 19.
** Asia gasoline sentiment is expected to stay subdued with demand in the Philippines set to be hit as Manila shuts churches and curbs travel for two weeks from March 22 as the number of new cases exceeded 7,000 for three days in a row, local media reported. On the supply side, gasoline production is poised to rise as refiners raise RFCC runs amid firmer gasoline margins.
** Nonetheless, the Singapore 95-92 gasoline spread is expected to hold firm as import demand for 95 RON gasoline from Malaysia was improving, amid the delayed restart of the 300,000 b/d RAPID refinery in Pengerang to the second half of the year from April-May due to the extended Movement Control Order, and steady-to-tight MTBE balance, sources said. The spread hit the highest in over eight months at $1.99/b on March 18, before retreating to $1.93/b March 19, S&P Global Platts data showed.
NAPHTHA** The physical CFR Japan naphtha benchmark stood at $577.50/mt in early trade March 22, up $5.50/mt from the Asian close March 19, due to higher crude.
** Sentiment was softer with front-month April-May Mean of Platts Japan naphtha swap spread at $5.50/mt in mid-morning trade March 22, according to broker indications. This was 25 cents/mt lower than the March 19 Asian close, when it was at $5.75/mt, Platts data showed.
** Asia's naphtha fed steam crackers have increased their use of LPG as an alternative feedstock, which had become economical due to the end of winter heating demand and wide margins for olefin production, sources said. This has decreased some demand for naphtha in Asia, however, steam crackers were only able to switch out a partial amount of their feedstock to LPG.
** The key spread between CFR Northeast Asia ethylene and CFR Japan naphtha physical was last assessed at $527/mt on March 19, which is well above the $350/mt breakeven spread for non-integrated producers, Platts data showed. Looking downstream, polyethylene-naphtha margin also remains comfortably above the typical breakeven of $450/mt, as the HDPE film CFR Far East Asia spread to CFR Japan naphtha physical was at $667/mt on March 19, Platts data showed.
LPG** Front-month April CP propane swap was notionally indicated March 22 at $566.9/mt, versus $574/mt valued March 19.
** April-May CP swap backwardation was indicated at $43/mt March 22, versus $41/mt the previous session.
** Middle East cargoes in Asia were seen ample with Kuwait's KPC and Qatar's QPSPP showing split cargoes, offsetting any shortfalls in April loadings from Saudi Aramco.
** Buyers, led by Chinese PDH plants, remain keen on propane-heavy cargoes, making them partial towards US supply, while Indian spot demand for mixed cargoes stifled by high domestic stocks.
** This, together with a pause in the Indonesian spot demand, keeping propane at a premium to butane, indicated at $30/mt March 22, widening from $26/mt the previous session.
** Cheaper butane prompted North East Asian steam cracker operators to consider using LPG as an alternate feedstock to naphtha. April FEI propane swaps to Mean of Platts Japan naphtha assessment was valued March 19 at minus $22.75/mt, while butane was at minus $48.75/mt.
