Asia Naphtha/Gasoline-Naphtha refining margin flips back into discounts

Asia’s naphtha refining profit margin flipped back into discounts on Monday in the absence of trades at the window but the price of first-half September naphtha rose by $2 to$604.75 a metric ton.

The crack fell by about $4 to minus $2.75 a metric ton over Brent crude in a backwardated market.

“We expect a slight seasonal uplift in downstream petrochemical demand between August and October. However, the expected rise in naphtha demand will mostly be a result of steam crackers returning from maintenance through early third quarter,” analysts at consultancy FGE said in a note dated July 21.

At the trading window, there were no deals for naphtha for a sixth consecutive session. Gasoline was also not traded on Monday.

The gasoline crack climbed to its highest level since April 11 on Monday, with a rise in U.S. margins amid strong seasonal demand.

TENDERS

Sri Lanka’s Ceypetco sought term supplies consisting of six shipments of 300,000 barrels each of benchmark-grade of gasoline for delivery from Sept. 22 this year to Jan. 21, 2024, the company said in a tender that closes on Aug. 8. The tender will remain valid for 60 days.

The company also sought 300,000 barrels of 92-octane gasoline for delivery during Sept. 9-10 in a tenderthat closes on Aug. 8 and remains valid for 72 hours.

South Korean LG Chem bought a cargo of first-half September naphtha of minimum paraffinic content of 70% at lower single-digit discounts to MOPJ naphtha, market participants said.

NEWS

– Chinese oil refiners and petrochemical companies are investing tens of billions of dollars to produce high-end chemicals for solar panels and lithium-ion batteries to profit from growing demand for energy transition technologies.

– Oil prices rose on Monday as tightening supply and hopes for Chinese stimulus underpinned Brent at well above $80 a barrel, even as traders expected more rate hikes from U.S. and European central banks.
Source: Reuters (Reporting by Mohi Narayan; editing by Eileen Soreng)