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Asia light ends: Key market indicators for Jan 24-28

Asia’s light ends were firmer during mid-morning trade Jan. 24, on stronger crude oil futures, with regional gasoline supported by active driving demand ahead of and during Lunar New Year celebrations.

But the underlying market sentiment for naphtha remains weak on persistent concerns over poor olefin and aromatics margins, while LPG is balanced between a pause in Chinese and Indian demand, and purchases by steam crackers leveraging on cheaper LPG versus naphtha.

Front-month March ICE Brent crude futures stood at $88.68/b at 0402 GMT Jan. 24, up from $86.66/b at the Asian close Jan. 21.

** February FOB Singapore 92 RON gasoline swap rose at the start of the trading week, pegged notionally higher around $98.36/b at 0200 GMT Jan. 24, up 2.14% from the previous session, Platts data showed.

** US RBOB-Brent crack fell 0.75% from the previous session to $14.72/b in early trade. US gasoline stocks rose 5.87 million barrels to 246.62 million barrels the week ended Jan. 14, the Energy Information Administration data showed. US product supplied, or implied demand, of finished motor gasoline rose 4.02% on the week to 8.224 million barrels in the week ended Jan. 14, to a three-week high, and was last higher in the week ended Dec. 24 at 9.724 million barrels.

** Lending support to the gasoline complex, was another sign of a revival in regional demand as Vietnam’s Saigon Petro sought 10,000 mt of 95 RON gasoline for February loading, in a tender closing Jan. 24.

** Driving activity in key regional economies held above baseline levels, indicating an improvement in mobility indexes. According to the latest Apple mobility data Jan. 21, driving activity in India, Vietnam and Malaysia were recorded at 72.52%, 34.51% and 41.97% above baseline levels, respectively.

** Sources expect the bullish momentum to last through the rest of the month, with gasoline demand supported by Lunar New Year festivities in the region.

** The physical C+F Japan naphtha marker rose $18.25/mt from the previous Asian session to $795.75/mt in mid-morning trade Jan. 24 on higher crude.

** Sentiment was stable mid-morning Jan. 24, with brokers pegging front-month February-March Mean of Platts Japan naphtha swap time spread at $10.50/mt, unchanged from the previous close, Platts data showed.

** Sentiment is likely to be bearish this week amid thin olefin and aromatics margins weighing on naphtha demand.

** The key CFR Northeast Asia ethylene and C+F Japan naphtha narrowed $27.75/mt week on week to $147.50/mt at the Asian close Jan. 21, Platts data showed. The spread has been below typical breakeven levels for non-integrated producers of $350/mt since Dec. 23, 2021. The unprofitable margin is likely to force steam crackers to reduce run rates.

**The soft market was reflected in the CFR Japan naphtha physical crack against front month ICE Brent crude futures which narrowed $10.075/mt week on week to $127.55/mt at the Asian close Jan. 21, Platts data showed.

** Front-month February propane CP swaps were indicated at $757/mt Jan. 24, up from $746/mt the previous session and $17/mt above January term CP, placing the next term Contract Prices for January possibly on track for a rebound after two consecutive declines.

** But some traders noted that with the pause in Chinese demand as Lunar New Year looms and India expected to reemerge around March, the January CPs could still show a dip or remain steady at December levels, when Saudi Aramco announces the term CPs Jan. 31 .

** The February-March propane CP backwardation was pegged at $25/mt Jan. 24, versus $19/mt the previous session, while March-April was indicated at a steady $33/mt backwardation,

** The February butane swap was indicated $8/mt below propane Jan. 17, versus $7/mt previous Asian close.

** With February FEI propane versus Mean of Platts Japan naphtha assessments hovering around $30/mt discount, the market will watch for signs of more demand from steam crackers for LPG as alternate feedstock, after recent purchases from South Korean and Taiwan petrochemical makers.
Source: Platts

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