Asia Octane: Key market indicators July 19-23
Asian naphtha and ethanol markets are expected to lead regional octane blendstock this week, with fundamentals on the naphtha front staying firm due to a combination of healthy demand and tight arbitrage supply.
Rising driving activity in the Philippines meanwhile, have kept the ethanol complex supported, while buyers are looking toward deliveries over the Q4 2021 cycle.
Meanwhile, headwinds from tepid Asian gasoline demand weighs on the regional MTBE complex, while toluene and isomer mixed xylene blendstocks similarly faced muted appetite from regional blenders.
Naphtha
** The Asian naphtha complex will see start of trading for the H1 September delivery cycle this week, which is expected to see extended support from robust demand from Asian steam crackers and limited arbitrage inflows from Europe, sources said.
** The firm sentiment has been particular reflected in the swap backwardation structure, with the front-month August-September Mean of Platts Japan naphtha swap spread having last assessed at a four-month high backwardation of $10/mt, S&P Global Platts data showed.
** Also reflecting firm sentiment, the CFR Japan naphtha physical crack against front-month ICE Brent crude futures was last assessed at $126.425/mt on July 16's Asian close, an increase of $3.425/mt week on week, Platts data showed.
** The Singapore reforming spread – the difference between Singapore 92 RON gasoline and Singapore naphtha derivative – also narrowed to $7.43/b July 16 from $8.88/b on July 9, with the crunch in the spread a result of a firm naphtha market, Platts data showed.
MTBE
** The Asian MTBE market is likely to see further downside this week, with softening regional gasoline and a wider decline in the overall crude complex prompting selling interest, sources said.
** Meanwhile, India's Haldia Petrochemical Ltd. was heard to be planning to shut its 90,000 mt/year of MTBE plant in Haldia for a scheduled maintenance in August. According to a market source close to the company, the plant will shut for around a month, with the expected restart to be sometime in early to mid-September. The company had previously sold 5,000 mt of MTBE cargo for loading over July 21-25 at around low-$20s/mt discount to Mean of Platts Singapore MTBE assessments, on an FOB basis, Platts reported earlier.
Toluene
** The Asian toluene market is expected to see support from one-sided demand, with appetite from operators running toluene disproportionation plants staying healthy while demand from the gasoline-blending sector remained weak.
** September trading laycans have in fact, attracted some buying interest, resulting the FOB Korea toluene physical price being assessed at $756/mt on July 16, Platts reported earlier.
** That said however, signs of resistance on higher prices have also emerged, with downstream benzene and paraxylene having stayed relatively rangebound throughout the week.
Isomer Mixed Xylenes
** Regional fundamentals for isomer mixed xylenes are expected to see some weakness this week, with high prices of the blendstock keeping buyers on the sidelines while rise in supply is also expected to pull down the sentiment.
** On the former, the price of FOB Korea isomer-MX physical was assessed at $806.5/mt on July 16, which according to industry source was one of the higher priced blendstocks.
** On the supply-side, most Japanese isomer mixed xylenes producing plants are expected to begin returning to normal operations over the period of mid-July and August, thereby increasing overall supply in Asia.
Ethanol
** Regional demand for ethanol is expected to increase this week, with sources from key buyers in the Philippines noting that gasoline demand was rebounding in line with an uptick in domestic traffic. Driving activity in the Philippines was in fact been seen at around 32% above baseline levels as of July 17, the highest since March, Apple mobility data showed.
** To that end, ethanol purchases are expected to resume in end-July or early-August for the Q4 delivery cycle, with offers for the blendstock already being heard in the Philippines at around $690/cu m on a CFR basis.
** Outright prices nevertheless, continue to trace news on the US front, having taken cues from a bullish US Energy Information Administration report that said US ethanol production fell 26,000 b/d to 1.041 million b/d, while total stocks fell 15,000 barrels as well.
Product
Jul-16
W-o-W Change
RON
Price per Ron ($/mt)
Price per Ron ($/cu m)
GASOLINE
FOB Singapore 91 RON non-oxygenated
$83.65/b
-1.23%
91
NA
NA
FOB Singapore 92 RON oxygenated
$82.2/b
-1.71%
92
FOB Singapore 95 RON oxygenated
$84.26/b
-1.90%
95
FOB Singapore 97 RON oxygenated
$85.47/b
-1.92%
97
BLENDSTOCKS
null FOB Singapore Naphtha
$75.39/b
0.37%
72
1.01
2.76
FOB Korea Toluene
$756/mt
1.48%
115
2.49
6.40
FOB Singapore MTBE
$731/mt
-5.19%
115
1.40
1.66
FOB Korea Isomer-MX
$806.5/mt
-1.41%
113
5.13
9.46
CIF Philippines Ethanol
$655.33/cu m
0.15%
118
4.97
5.86
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