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Asia light ends: Key market indicators this week

The Asia light ends market rose when markets opened May 24, amid strong crude markers.

The Asia gasoline market is under pressure amid more movement restrictions across Asia, especially in Malaysia and Taiwan where the coronavirus pandemic is worsening, while Asia naphtha is expected to see greater buying interest for H1 July delivery cargoes this week, market sources said.

Buyers of Asia LPG are turning to the Middle East to meet demand as a few June-loading US cargoes were canceled amid a closed US-Asia arbitrage.

The July ICE Brent crude futures rose $2.26/b or 3.5% from the Asian close on May 21 to $67.04/b at 0300 GMT May 24.

Gasoline

**The June FOB Singapore 92 RON gasoline swap strengthened in early May 24 trading, rising 3.07% from the previous trading session at around $72.92/b, tracing firmer crude prices.

**Downward pressure still weighed on the Asian gasoline complex, with demand also likely to be weak. Malaysia, which reported a record-high 6,806 new cases of coronavirus infections May 20, announced additional movement restrictions over the weekend, including mandatory work-from-home arrangements and limited business capacity starting May 25. Driving activity in Malaysia has already fallen 34% below baseline levels as of May 22, the lowest since late-January, Apple mobility data showed.

**Driving activity in Taiwan also fell amid a spike in domestic infections, and was recorded at 47% below baseline levels as of May 22, Apple mobility data showed. This was lower than the 25% fall seen during the peak of the pandemic in Q2 2020. With domestic gasoline demand slowing amid rising refinery run rates, Taiwan-based refiners Formosa Petrochemical and CPC Corp. could likely turn toward the export market to reduce excess inventories, market sources said.

**Meanwhile, traders will also be eyeing Pertamina’s third 92 RON gasoline tender for H2 2021. The Indonesia-based oil and gas company was seeking at least 500,000 barrels/month of 92 RON gasoline for delivery over July to December via a term tender that closes May 25, with validity till May 30. Traders had already sent in their offers for a total of up to 1.05 million barrels per month of 92 RON gasoline and 1.05 million barrels per month of 88 RON gasoline in the week ended May 21. Pertamina’s term tenders from the week ended May 21 will likely be awarded from May 31 onward, according to tender documents.

Naphtha

**The physical C+F Japan naphtha rose $16.75/mt from the Asian close May 21 at $591.375/mt mid-morning May 24, amid gains in crude.

**The spread between the June CFR Japan naphtha and CIF NWE naphtha assessments had trended lower towards the end of the week ended May 21, and brokers pegged the June East-West spread at $12/mt in mid-morning trading May 24, a fall of 50 cents/mt from the London close May 21, S&P Global Platts data showed.

**The front month June-July Mean of Platts Japan naphtha swap had risen $1.25/mt on the week to $5.75/mt at the Asian close May 21. Brokers pegged the spread lower at $5.25/mt in mid-morning trade May 24, Platts data showed, amid a weaker European segment.

**More North Asia naphtha end-users are expected to buy for the current H1 July delivery cycle in the week starting May 24.

LPG

**Front-month June contract price propane swap was notionally indicated at $505/mt May 24, compared with $501/mt May 21. The June CP swap was pegged $10/mt above May term CP. Saudi Aramco is expected to announce June term CPs by May 31.

**June-July CP propane swap structure was indicated at $1/mt backwardation May 24, compared with $2/mt backwardation May 21, while July-August was indicated to be at a backwardation of $1/mt compared with $1.50/mt May 21.

**June propane CP swaps was indicated $4/mt above butane, unchanged from May 21.

**Asia was well supplied with Middle East cargoes following June acceptances from all major producers, in line with lifters’ nominations, along with regular spot offers and sales by Kuwait and Qatar.

**With several June-loading US cargoes being cancelled, Asia-based buyers are turning to supply from the Middle East to meet their petrochemicals demand during the summer, as the discount of LPG to naphtha was indicated near the economically viable level of $50/mt.

**Spot demand from India and Indonesia have returned to being weak.
Source: Platts

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