ASIA OCTANE: Key market indicators for Aug 1-5

The Asian gasoline market was expected to face downward pressure in the Aug.1-5 trading week as demand from major buyer Indonesia was heard low amid ample inventories, while Indonesia's blendstock demand was also expected to fall as Pertamina's Balikpapan refinery was due to begin month-long maintenance in August, the sources said.

However, Malaysia's demand for 95 RON gasoline was heard firm amid healthy driving activity.

Reflecting firmer demand for higher octane gasoline, the Platts FOB Singapore 92-95 inter-RON spread rose to $4.63/b July 28 from $4.58/b July 27 and remained stable at $4.63/b at the Asian close July 29, S&P Global Commodity Insights data showed.

Naphtha

** The Asian naphtha market remains under pressure this week from weak demand, while spot buying was also expected to slow down with some crackers heard bringing forward plant maintenance, possibly reducing the need for cracker-feed naphtha amid ample supply.

** The key spread between CFR Northeast Asia ethylene and CFR Japan naphtha physical has remained below the minimum breakeven level of $250/mt for integrated producers since May 13, S&P Global data showed. It stood at $137.75/mt at the Asian close July 29, up $13.25/mt on the week.

** The key CFR Japan naphtha physical crack against front month ICE Brent crude futures was assessed at $53.15/mt July 29, compared to minus $13.75/mt July 22, S&P Global data showed, indicating declining demand.

** Supply was also ample, with sellers in the Middle East and India offering up to 124,000 mt of naphtha via tender last week, potentially exerting downward pressure on prices.

** The reforming spread between 92 RON gasoline FOB Singapore and Singapore naphtha derivative widened $10.85/mt on the week to $35.40/mt July 29, S&P Global data showed.

MTBE

** Asian MTBE was expected to be on an upward trajectory over Aug.1-5 due to tight supply, lower run rates and a rebounding energy complex.

** The Petrochemical Corporation of Singapore has lowered run rates at its two MTBE plants at Pulau Ayer Chawan to 70% of capacity after the shutdown of its No. 2 naphtha-fed steam cracker earlier in the week, a market source close to the company said late last week.

** Demand was expected to be supported by the persistently wide spread between FOB Amsterdam-Rotterdam-Antwerp (ARA) and FOB Singapore MTBE prices. Stronger arbitrage demand for MTBE in Europe and the US has also been supporting Asian MTBE prices in the absence of Chinese demand due to prolonged COVID-19-related lockdowns, market sources said.

Toluene

** Toluene prices were expected to see some stability over Aug. 1-5 as supply and demand fundamentals balance out for August cargoes, industry sources said.

** High freight costs and congestion at ports continue to hamper trade flows into South Asia, industry sources said.

** Sellers in Southeast Asia and China were anticipating seeing some demand from Vietnam, Indonesia and India in the week amid tight ship availability.

Isomer-MX

** Asian isomer-grade mixed xylene was likely to track movements in paraxylene and crude oil prices over Aug. 1-5 after prices rose $59/mt on the week to $1,006/mt FOB Korea July 29, S&P Global data showed, on the back of gains upstream.

** With assessment laycans rolling forward Aug. 1 to consist of H1 and H2 September, trading activity may pick up after having been thin last week, market sources said.

Ethanol

** Focus in the Asian ethanol complex over Aug. 1-5 will be on the Philippines moving into the Q4 delivery cycle. Buying activity was expected to be slow initially as end-users remain cautious amid volatile feedstock futures and high outright ethanol prices, market sources said.

** A decline in US ethanol production could help keep outright prices for ethanol firm. US ethanol production fell by 13,000 b/d week on week to 1.021 million b/d in the week ended July 22, US Energy Information Administration data released July 27.

** US ethanol delivered to the Philippines was assessed at $798.67/cu m July 29, up from $765.33/cu m the week before, S&P Global data showed.