Asia light ends: Key market indicators this week
The Asia light ends market opened the week starting June 14 on a mixed note, with gasoline steady to firmer while naphtha and LPG prices were marginally weaker.
Asia gasoline is buoyed by lower exports from India amid Reliance Industries’ fluid catalytic cracker outage at the Jamnagar export-oriented refinery, while naphtha is weighed down by a softer European naphtha complex.
Saudi Aramco is expected to announce its acceptance of term buyers’ nominations of July LPG cargoes by the end of the week, amid a well-supplied Middle Eastern market.
August ICE Brent crude futures rose 42 cents/b from the June 11 Asian close to $73.06/b at 0300 GMT June 14.
** The July FOB Singapore 92 RON gasoline swap inched higher in early June 14 trading with the level notionally pegged at $78.83/b, 0.29% higher than the previous trading session as steady Asian gasoline fundamentals combined with a bullish crude demand outlook to lift the motor fuel complex.
** Firm Asian gasoline fundamentals comes mainly from supply-side support, with participants eying news of the anticipated restart date of Reliance’s Jamnagar FCC. An unplanned outage at the FCC in the 704,000 b/d facility buoyed sentiment late last week, after the company reported in a regulatory filing that some oil product shipments, including gasoline, would be delayed. Combined with lower gasoline exports from China in June, industry sources expect some supply tightness in the near term.
** Weakness in regional demand is expected to cap the motor fuel’s recovery. Malaysia, a large buyer of high octane gasoline, announced June 11 that it would be extending its movement control order until June 28 as the number of new daily COVID-19 cases have remained above the 5,000 mark.
** Adding downside pressure on Asian gasoline as well, President Joe Biden’s administration was considering the provision of reliefs to US refiners from biofuel blending mandates, which dragged down the US RBOB-Brent crack. The US RBOB-Brent crack, which influences the Asian gasoline crack spreads, was at $19.38/b at 0200 GMT June 14, down 4.51% from the previous trading session.
** The physical C+F Japan naphtha price fell $1/mt from the June 11 Asia close to $642.375/mt mid-morning June 14, weighed down by a weaker European naphtha complex.
** A stronger crude complex and healthy demand in the Asian naphtha market had boosted benchmark C+F Japan naphtha by $6.50/mt day on day to the highest in two years and seven months at $643.375/mt on June 11, Platts data showed. The benchmark was last higher on October 23, 2018 at $659.375/mt, the data showed.
** The Asian naphtha complex is slated to see North Asian end-users complete H2 July naphtha buying requirements and begin purchasing of H1 August delivery cargoes in the second half of the week.
** Stable sentiment was reflected in swaps, as brokers pegged the front-month July-August Mean of Platts Japan naphtha swap spread at $5.75/mt in mid-morning trade June 14, stable from the June 11 Asian close, Platts data showed.
** The front-month July propane contract price swap was notionally indicated at $578/mt June 14 versus $583/mt June 11. The July propane CP swap was indicated $4/mt above butane, unchanged from the previous session.
** The July-August CP propane swap was indicated at a $6/mt backwardation from a $5/mt backwardation the previous session, while August-September was at a $1/mt backwardation, unchanged from the previous session.
** Saudi Aramco is expected to announce acceptances of July nominations by the end of the week. If there are no delays or cancellations, the Middle East would be well-supplied with LPG, as Qatar Petroleum and ADNOC have also accepted July nominations without cuts or delays.
** The propane discount to naphtha has been hovering around the $20-$30/mt range — rendering LPG an unviable petrochemical feedstock.
** Qatar Petroleum is due to award its tender offering 45,000 mt of propane for July 19-21 loading June 15, with next-day validity.
** India’s BPCL is due to award its tender seeking 45,000 mt of evenly split cargo for delivery over July 15-Aug 15 (for CIF basis) or loading over July 11-Aug 11 (for FOB basis), on June 17, with next-day validity.