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20 Jun 2022 | 05:32 UTC
Seasonal demand for the summer driving period is expected to prop up overall demand for Asian gasoline and its blending components over June 20-24, sources said.
Tight supply is also expected due to the draw of octane-boosting blendstock components out of Asia to the US, and the scheduled turn around of Petronas' Melaka 300,000 b/d refinery, market sources said.
The attractive Singapore reforming spread had supported the key FOB Singapore inter-ron spread for 92 RON and 95 RON gasoline grades, which was last assessed at $6.50/b on June 17, up $1.85/b week on week.
** The reforming spread, or difference between Singapore 92 RON gasoline and the Singapore naphtha derivative, has been on an uptrend as it has widened from an average of $41.60/b in May to $56.43/b over June 1-15, S&P Global Commodity Insights data showed. This is an indication that naphtha has become more economically attractive as a gasoline blendstock.
** Asia's demand for cracker-feed naphtha was muted, which resulted in Taiwan's Formosa and CPC emerging to seek term cargoes during the bearish period, however spot purchasing remained thin.
** Poor downstream margins continued to pressure the Asian naphtha market, as the spread between CFR Northeast Asia ethylene and CFR Japan naphtha physical was at $150.13/mt at the Asian close June 17, and it has been below the minimum $250/mt level since May 13, S&P Global data showed. Typical breakeven levels were $350/mt for non-integrated producers and $250/mt for integrated producers, sources said. Still, there was some upside seen in the middle of the week when it crossed the $200/mt mark from June 14-16.
** Much of the recovery in the naphtha market hinges on China's return to the market, with some market sources estimating a comeback in July.
** Asian MTBE price was expected to extend gains this week on the back of lucrative gasoline blending economics as well as continued arbitrage demand to the US and Europe.
** The spread between FOB ARA and FOB Singapore MTBE reached a record high of $584.25/mt on June 13, S&P Global data showed. Meanwhile, the spread between the FOB US Gulf Coast/FOB Singapore MTBE had reached a record high at $664.723/mt on June 13, amid strong gasoline demand from Mexico and tight octane supplies in the US.
** Against the backdrop, South Korea's MTBE exports jumped 50.34% month on month to 15,168.8 mt in May, Korean customs data showed June 16, as exporters sought to capitalize on high prices in Singapore. The country's MTBE exports to Singapore touched a year-to-date high at 15,088.6 mt in May, spurred by a rise in FOB Singapore MTBE prices that incentivized South Korea's MTBE producers to send cargoes to Singapore instead of China.
** Asian toluene prices look to ease this week as more cargoes emerge from Southeast Asia and Northeast Asia, trading sources said. "Even [gasoline] blenders cannot pay such current high [toluene, solvent] prices," a trader said.
** FOB Korea toluene price was last assessed at $1,240/mt, down $15/mt on the day amid more solvents being offered into the market. Malaysia's Lotte Chemical Titan emerged to offer a 2,000 mt mid-July loading cargo while Taiwan's CPC offered a 3,000 mt isomer-mx and 3,000 mt solvent-mx cargo both for H2 July loading the previous week.
** China-origin cargoes are also available, with offers heard lower around $1,280/mt FOB China, down from the week before at around $1,370/mt, sources said. Two July-loading China-origin cargoes of 6,000 mt and 5,000 mt were heard traded earlier the week before, industry sources said. Both were traded at $1,320/mt and $1,300/mt on an FOB China basis, respectively, adding that the 6,000 mt was bound for Southeast Asia.
** Asia's Isomer-MX started the week on a bearish note, due to slowing demand from the US Gulf Coast as the peak driving season occurs towards end-August, weaker global economic sentiment, and sluggish PX prices.
** Key FOB Korean Isomer—MX marker was last assessed at $1,246.50/mt on June 17, down from $1,444/mt on June 10, S&P Global data showed.
** In latest deals concluded the previous week, Taiwan's CPC awarded a 3,000 mt Isomer-mx cargo loading H2 July to ICC Chem Corporation, at a price flat to a discount of $7/mt to Platts Isomer-MX FOB Korea assessment on the contract loading month, sources said.
** The PX-MX spread strengthened $36.50/mt day on day to $33.50/mt on June 17, S&P Global data showed.
** Q4 ethanol buying remained off the table for Philippines buyers though interest was piqued for purchases in the far months of November-December 2022 with buyers pondering of taking advantage of the inverse in the fuel ethanol structure to book cargoes.
** Gasoline levels remained elevated in the Philippines at Pesos 80s/liter though demand had stayed steady amid elevated prices and could climb as face-to-face classes start in schools this week for the first time in over 2 years according to sources.
** Bioethanol CIF Philippines was assessed at $858.67/cu m on June 17 against $867.67/cu m on June 10.
** Meanwhile, US ethanol production averaged 1.06 million b/d in the week ended June 10, up 21,000 b/d week on week, Energy Information Administration or EIA data showed.
Source: S&P Global Commodity Insights data
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