OPIS Asia Naphtha & LPG Report Wednesday, 8 February 2017

Asia Naphtha & LPG Report

A Daily Report on Asia Naphtha, LPG and Gasoline Spot Prices, plus News and Commentary

Today’s Outright Spot Naphtha Prices ($/mt) Table of Contents

Market Low High Mean Change
CFR JAPAN 505.50 506.50 506.00 -10.00 Naphtha Prices p. 1
FOB SINGAPORE ($/bbl) 54.70 55.70 55.20 -1.10
Naphtha News p. 7
FOB ARAB GULF LR 1 486.50 487.50 487.00 -9.75
Naphtha Papers p. 2
FOB ARAB GULF LR 2 492.00 493.00 492.50 -10.00
LPG Prices p. 3
LPG News p. 9
Spread/Differential ($/mt)
Price Low High Mean Change Gasoline Prices p. 4
NAP-BRENT CRACK 101.38 102.38 101.88 -2.95 Gasoline News p. 10
INTER-MONTH SPREAD 8.00 9.00 8.50 0.00 Condensate News p. 11
CFR SPOT DIFFERENTIAL 8.00 9.00 8.50 0.00 Refining News p. 13
FOB SPOT DIFFERENTIAL 9.50 10.50 10.00 -4.00

Naphtha Freight
Route Value NAPHTHA
SINGAPORE-JAPAN ($/bbl) 1.69
KOREA-JAPAN ($‘000) 267.50 • H2 Mar buying spree continues from KR
AG-JAPAN LR 1 ($/mt) 18.93 • HFRN-OSN spread narrows further
AG-JAPAN LR 2 ($/mt) 13.51 • JP nap production up sharply on high
AG-JAPAN LR 1 (WS) 105.46 cracker run-rates 

AG-JAPAN LR 2 (WS) 78.90

Naphtha Cracks Asian naphtha market remained stable on

the back of the continued buying spree
120
from South Korean end-users.
110
The naphtha crack to Brent inched down by
$2.95/mt to $101.88/mt, while the inter-
100
month spread remained unchanged at
$8.50/mt backwardation.
90

The naphtha prices softened further,

80
25/1 31/1 3/2 8/2 dropping by $10.00/mt across the board,
1st Cycle Naphtha Crack with notional values for H2 Mar ending at
2nd Cycle Naphtha Crack
$512.50/mt, H1 Apr at $508.00/mt and H2
Naphtha Spreads Apr at $504.00/mt.
20.0
( Continued on page 7 )
15.0

Editorial Contacts
10.0
David Wang dwang@opisnet.com
5.0 Jinchul Kim ckim@opisnet.com

Jungwoo Hwang jhwang@opisnet.com

0.0 John Koh jkoh@opisnet.com
25/1 31/1 3/2 8/2 Ronald Kwan rkwan@opisnet.com
Inter-Month Spread E-W Spread Jiwon Chung jchung@opisnet.com

CFR Korea Differential

© Oil Price Information Service (OPIS), an IHS Markit company. 1

OPIS Asia Naphtha & LPG Report Wednesday, 8 February 2017

Open Spec Naphtha Mid-Day Paper ($/mt) OPIS Asia Naphtha Methodology
Laycan Low High Mean Change
H2 Mar 510.50 511.50 511.00 -16.00 OPIS Asia assesses the naphtha market in Asia,
H1 Apr 506.00 507.00 506.50 -16.00 providing accurate and up-to-date price
H2 Apr 502.00 503.00 502.50 -15.50 assessments based on CFR and FOB
assessments seen in different markets in the
Open Spec Naphtha Close Paper ($/mt) world..
Laycan Low High Mean Change
H2 Mar 512.00 513.00 512.50 -10.00 The Asian naphtha assessments reflect spot
H1 Apr 507.50 508.50 508.00 -10.00 prices based primarily on deals, bids, and offers
H2 Apr 503.50 504.50 504.00 -10.00 done typically on a fixed-price basis, reflecting
values prevailing at the close of the market, with
Northwest Europe Mid-Day Naphtha Swaps ($/mt) priority given to deals done in the markets.
Laycan Low High Mean Change
Mar 481.75 482.75 482.25 -16.00 OPIS naphtha methodology builds on the basis
Apr 478.00 479.00 478.50 -15.25 of the latest CFR FAR EAST OPEN SPEC
May 474.25 475.25 474.75 -15.00 NAPHTHA CONTRACT agreed upon in the
industry.
Northwest Europe Close Naphtha Swap ($/mt)
Laycan Low High Mean Change OPIS uses daily forward paper/swaps value as a
Mar 484.75 485.75 485.25 -12.00 basis of our Asian daily assessments. While
Apr 481.00 482.00 481.50 -11.25 mid-day values are used as a reference, we use
May 477.25 478.25 477.75 -11.00 the numbers at market close (at 16:30 Singapore
time) to calculate OPIS final signature values.
Naphtha East-West Spreads ($/mt)
Laycan Low High E-W Change In markets where number of trades, bids and
Mar 12.75 13.75 13.25 0.00 offers are limited due to low liquidity, price
Apr 12.75 13.75 13.25 0.00 assessment may be assessed relative to other
May 12.75 13.75 13.25 0.00 locations, for example, through direct freight
netback.
FOB Singapore Mid-Day Naphtha Swap ($/bbl)
Laycan Low High Mean Change CFR JP Prop/Nap, LPG/Nap Ratio
Feb 54.75 54.85 54.80 -1.75 1.15
Mar 53.85 53.95 53.90 -1.70
Apr 53.20 53.30 53.25 -1.75 1.08

FOB Singapore Close Naphtha Swap ($/bbl)

1.00
Laycan Low High Mean Change
Feb 54.95 55.05 55.00 -1.10
0.93
Mar 54.05 54.15 54.10 -1.10
Apr 53.50 53.60 53.55 -1.00
0.85
25/1 31/1 3/2 8/2
Naphtha vs Propane vs LPG H2 Mar Propane/Naphtha Ratio
575 H2 Mar LPG/Naphtha Ratio

525

475

425

375
H2 Mar H1 Apr H2 Apr
Naphtha Propane LPG

© Oil Price Information Service (OPIS), an IHS Markit company. 2

OPIS Asia Naphtha & LPG Report Wednesday, 8 February 2017

Today’s Outright CFR Spot Propane Prices ($/mt) Industry Events


Market Low High Mean Change
CFR JAPAN 488.50 489.50 489.00 -9.75
* OPIS 7th Annual NGL Summit will
CFR SOUTH CHINA 485.50 486.50 486.00 -9.75
take place over Mar 6-9 at the
Rosen Centre Hotel in Orlando, FL

Today’s Outright CFR Spot LPG (11:11) Prices ($/mt)
Market Low High Mean Change
CFR JAPAN 533.50 534.50 534.00 -9.50 * The 22nd International LP Gas
CFR SOUTH CHINA 530.50 531.50 531.00 -9.50 Seminar will take place over Mar 7-8
at the Nikkei Hall in Tokyo, Japan

Today’s Outright FOB Arab Gulf Spot Prices ($/mt)
Market Low High Mean Change * LPG Trading, Marketing & Price Risk
PROPANE 469.50 470.50 470.00 -15.00 Management will take place over
BUTANE 569.50 570.50 570.00 -5.00 Mar 6-10, 2017, in Singapore


Today’s FOB Arab Gulf Spot Differential ($/mt) * The 22nd China LPG Conference will
Market Low High Mean Change
take place over Mar 15-17 in
PROPANE -2.50 -1.50 -2.00 -2.00
Chengdu, China

BUTANE 97.50 98.50 98.00 8.00

Far East Propane Paper ($/mt)

Laycan Low High Mean Change Oil Price Information Service Asia
H1 Mar 488.50 489.50 489.00 -11.00 8 Marina View
H2 Mar 488.50 489.50 489.00 -8.50
Asia Square Tower 1, #12-01
H1 Apr 458.50 459.50 459.00 -3.50
Singapore 018960
H2 Apr 454.50 455.50 455.00 0.50

Far East LPG (11:11) Paper ($/mt)

Laycan Low High Mean Change LPG
H1 Mar 533.50 534.50 534.00 -11.00
H2 Mar 533.50 534.50 534.00 -8.00 • Feb stays bullish on tight supply
H1 Apr 498.50 499.50 499.00 -3.00
• Sentiments buoyed by robust Indian
H2 Apr 489.50 490.50 490.00 1.00
demand
LPG CP Propane Swaps ($/mt) • U.S. propane stocks likely to fall further

Laycan Low High Mean Change
Mar 471.50 472.50 472.00 -13.00
Apr 441.50 442.50 442.00 -8.00 The Asia LPG market sentiments remained
May 420.50 421.50 421.00 -3.00 supported on Wednesday despite the falls
in outright prices in line with weaker crude
Saudi Aramco LPG Contract Prices
Date Propane Change Butane Change prices, on the back of the robust demand
Feb-17 510 75 600 105 in India, coupled with tight supply in the
Jan-17 435 55 495 75
Middle East.
Dec-16 380 -10 420 -20
Nov-16 390 50 440 70
Oct-16 340 45 370 50 The Mar CP swaps value retreated $13/mt
to around $472/mt, with the Mar-Apr
Sonatrach LPG Contract Prices
Date Propane Change Butane Change timespread narrowing $5 to a
Jan-17 400 55 430 50 backwardation of around $30/mt.
Dec-16 345 -5 380 -3
Nov-16 350 45 383 23
Oct-16 305 25 360 35 ( Continued on page 9 )
Sep-16 280 28 325 63

© Oil Price Information Service (OPIS), an IHS Markit company. 3

OPIS Asia Naphtha & LPG Report Wednesday, 8 February 2017

Today’s Spot Gasoline Prices ($/bbl) OPIS Asia Gasoline Methodology

Market Low High Mean Change
97-RON 70.05 70.15 70.10 -1.11
FOB Singapore assessments generally reflect
95-RON 68.76 68.86 68.81 -1.11 pricing of products loading 15 to 30 days from
92-RON 66.14 66.24 66.19 -1.11 the date of publication. In other words, a report
for March 1 will reflect reflection of forward
Today’s Spot Gasoline Differential ($/bbl) prices from March 16-30.
Market Low High Mean Change
97-RON 15.49 15.59 15.54 0.02 In our assessments, we use a variety of inputs
95-RON 14.20 14.30 14.25 0.02 which include outright, floating as well as a
92-RON 11.58 11.68 11.63 0.02 combination of both in terms of daily bids,
offers and strike prices in the respective oil
Today’s Spot Gasoline Cracks ($/bbl) product market on both the physical and swaps
Market Low High Mean Change trading.
97-RON 15.30 15.40 15.35 -0.17
95-RON 14.01 14.11 14.06 -0.17 We calculate the mid-value of the trading
92-RON 11.39 11.49 11.44 -0.17 window by using the weighted average
Gasoline Cracks calculation that use the curve of 1st and 2nd
cycle of swaps value. Then we add a discount
19.0
or premium to calculate the FOB Singapore
quotes.
16.0
For discount/premium assessments for FOB
13.0 Singapore quotes, we take transactions with a
minimum size of 50,000 barrels for gasoline.
10.0

7.0 Gasoline
25/1 31/1 3/2 8/2
97 RON 95 RON 92 RON
• JP exports stable amid healthy margins
Oil Price Information Service Asia • Pertamina charters urgent cargo headed
TEL: +65 6439 6282 for Balongan
TEL: +65 6439 6281 • Kenya oil agency awards gasoline
tenders

FOB Singapore Spot Diff. Calculation (92 RON)
Date Bid Offer Deal Diff The Singapore 92 RON gasoline crack
23-Feb 11.61
dipped 17 cents on Wednesday to $11.44/
24-Feb 11.61
bbl, with those for the 95 and 97 RON
25-Feb 11.61
26-Feb 11.60 11.60 gasoline closing at $14.06/bbl and $15.35/
27-Feb 11.60 11.60 bbl.
28-Feb 11.60 11.60
1-Mar 11.60 11.60
February 92 RON gasoline swaps dipped
2-Mar 11.60 11.60
90 cents to $66.00/bbl amid two 92 RON
3-Mar 11.61
4-Mar 11.61 deals done in the spot window.
5-Mar 11.61
6-Mar 11.64 11.69 Vitol bought a Feb 26-Mar 2 loading cargo
7-Mar 11.64 11.69 each from Shell at $66.30/bbl to Singapore
8-Mar 11.64 11.69
quotes, which worked out to $11.65/bbl to
9-Mar 11.64 11.69
naphtha quotes.
10-Mar 11.64 11.69
Notional Diff 11.61 Diff 11.63 ( Continued on page 10 )

© Oil Price Information Service (OPIS), an IHS Markit company. 4

OPIS Asia Naphtha & LPG Report Wednesday, 8 February 2017

CFR Japan Close Naphtha Swap ($/mt) CFR Propane, LPG/CFR Naphtha Ratio
Laycan Low High Mean Change Laycan Pro/Nap Change LPG/Nap Change
Mar 497.50 498.50 498.00 -13.00 H2 Mar 0.95 0.00 1.04 0.00
Apr 493.75 494.75 494.25 -12.25 H1 Apr 0.90 0.01 0.98 0.01
May 490.00 491.00 490.50 -12.00 H2 Apr 0.90 0.02 0.97 0.02

Japan Swaps vs. Naphtha NWE Naphtha Spot Cargo Flow Economics
525 550

500 500

475 450

450 400

425 350
Mar Apr May Jun Jul Aug US Para. AG WCI H2 Mar H1 Apr H2 Apr
Japan Swaps NWE Paper FOB/CFR Prices Freight

Naphtha East-West Spread Month-to-Date Avg Propane/Naphtha Ratio

18.0 1.20

16.0 1.10

14.0 1.00

12.0 0.90

10.0 0.80
Mar Apr May Jun Jul Aug 25/1 31/1 3/2 8/2
East-West Spread MTD AVG (CP+Fr+Prem)/Nap Swap Ratio
MTD AVG Prop CFR JP/Nap Swap Ratio

Naphtha Spot Cargo Flow Economics*

CIF NWE Swaps

Mar 485.25
Apr 481.50 Open-Spec Nap
USG Physical May 477.75 H2 Mar 512.50
HFRN 489.50 H1 Apr 508.00
40N+A 490.00 H2 Apr 504.00
CFR JP-USG Spread JP-NWE Swap Sprd
Para. N 466.25
HFRN 16.50 Mar 13.25
M2 UNL 534.25
40N+A 13.50 Apr 13.25
MB C5 438.25
Para. N 39.75 May 13.25 JP Swaps
Mar 498.00
Apr 494.25
Netbacks
May 490.50
AG LR1 487.00
WCI MR 485.75

* Values contain projection values

© Oil Price Information Service (OPIS), an IHS Markit company. 5

 OPIS Asia Naphtha & LPG Report Wednesday, 8 February 2017

Est’d Spot Prices with Freight to Japan ($/mt) LPG Mont Belvieu Forward ($/mt)
Loading Low High Mean Change Laycan Low High Mean Change
Mt. Bel 494.75 504.75 499.75 -35.00 Feb 407.75 408.75 408.25 -34.50
MED 493.50 503.50 498.50 -35.50 Mar 368.75 369.75 369.25 -23.50
A. Gulf 495.00 505.00 500.00 -15.75 Apr 343.75 344.75 344.25 -21.50

Propane Spot Cargo Flow Economics CP Swaps Values

550 550

500 500

450 450

400 400

350 350
M. Bel MED* AG H1 Mar H2 Mar H1 Apr Mar Apr May Jun Jul Aug
Prices Terminal Fees Freight Propane Swaps
*Estimated level

Month-to-Date Avg LPG/Naphtha Ratio Mont Belvieu Forward Prices

1.20 450

1.10 400

1.00 350

0.90 300

0.80 250
8/2 25/1 31/1 3/2 8/2 Mar Apr May Jun Jul Aug
wap Ratio MTD AVG LPG CFR JP/NAP Swap Ratio Mont-Belvieu Forward Prices
ap Ratio MTD AVG H2 Mar LPG/Nap Ratio

Propane Spot Cargo Flow Economics*

NWE Forwards
Mar 417.00
Apr 388.00 CFR Japan
NWE-MB Spread May 382.00 H1 Mar 489.00
Mar 47.75 H2 Mar 489.00
Apr 43.75 H1 Apr 459.00
Mont Belvieu
May 39.75 CP-NWE Spread H2 Apr 455.00
Feb 408.25
FOB AG Mar 55.00
Mar 369.25
Propane 470.00 Apr 54.00
Apr 344.25
Butane 570.00 May 39.00 CP Swaps
May 342.25
CFR JP-MB Spread Mar 472.00
Feb 48.75 Apr 442.00
Mar 58.75 Netbacks May 421.00
MED 438.00

* Values contain projection values

© Oil Price Information Service (OPIS), an IHS Markit company. 6

 OPIS Asia Naphtha & LPG Report Tuesday, February 7, 2017

NAPHTHA As noted earlier, the regional demand for

paraffinic naphtha has been strong amid
limited LPG cracking volumes for March
There were no deals that were done on the
coupled with strong demand from
Singapore paper market.

petrochemical sector on the back of the

sustained rally in C2 to C4, as well as
Buying spree for H2 Mar arrival spot naphtha
downstream benzene prices.

continued to emerge from South Korean end-

users, with SK Energy and Hanwha Total both
LPC cracking volumes for March are
heard seeking some volumes of heavy full-
estimated to be around at least
range naphtha (HFRN).

95,000-100,000 mt for Japan, Korea and

Taiwan, as well as, Southeast Asia, which
SK Energy was heard to have secured some
would be lower compared with the previous
barrels of HFRN for delivery into Ulsan at
month’s levels of 174,000 mt.

premiums of slightly below $6.00/mt to Japan

quotes, while Hanwha Total was heard to have
The month-to-date mean ratio between LPG
locked in some HFRN volumes for delivery
and naphtha swaps was seen at around 106%
into Daesan at plus $6.00/mt or slightly above,
for H2 Mar, which makes it uneconomic to
according to trade sources.

crack LPG into petrochemical pool, OPIS data

shows.

The latest transaction levels for H2 Mar arrival

HFRN cargoes by SK Energy and Hanwha
Nonetheless, a possible reduction in short-
Total would be slightly lower compared with
term demand for cracker-feed naphtha from
the H1 Mar arrival deals for HFRN, which were
Taiwan could emerge due to an unexpected
heard done at premiums of around
shutdown of Nan Ya Plastics Corp’s No. 3
$7.00-8.00/mt to Japan quotes, OPIS record
Mono-ethylene glycol (MEG) unit on Tuesday.

shows.

As reported previously, the firm was heard to

Based on the latest deal levels for H2 Mar
have shut its No.3 MEG production unit due to
arrival cracker-feed naphtha and HFRN, the
s o m e t e c h n i c a l i s s u e s , a c c o rd i n g t o
spread between these two grades of naphtha
petrochemical market sources.

has narrowed further to minus $2.50/mt,

according to OPIS assessment.

In addition to the No. 3 unit that was

reportedly shut, the firm’s No. 1 unit is also
The spread between HFRN and OSN has been
heard to be undergoing a four-week
remaining on a negative territory since Feb 1,
scheduled maintenance, which would result in
reflecting the strength in the current paraffinic
the total estimated MEG production loss of
naphtha market in Asia.

about 60,000 mt.

© Oil Price Information Service (OPIS), an IHS Markit company. 7

 OPIS Asia Naphtha & LPG Report Tuesday, February 7, 2017

OPIS estimates that it would translate into “I think most crackers are running at full tilt,”
about 36,000 mt of ethylene demand loss that said a Japanese end-user.

would be equivalent to about 108,000 mt of

naphtha demand loss.
The source added that bullish trends in C2 to
C4, as well as benzene prices for the prompt
Nan Ya Plastics Corp houses four MEG month have led the country’s petrochemical
production units with a capacity of 360,000- producers to maintain high cracker operating
mt/year each and receives ethylene as the rates.

main feedstock from Formosa Petrochemical

Corp. (FPCC), which is one of the major LPG
shareholders of the firm, according to the
company website.

In the CFR forward market, a European

trading house tabled a bid for a 23,000-mt
While there is a possibility that FPCC may
propane parcel for H2 Mar at plus $30/mt to
have to adjust its cracker runs, the source
Mar Far East quotes, or around $519/mt.

familiar with the matter said that the cracker

run-rates are still maintained at 100%.

The firm also came up with another bid for H2

Mar evenly split cargo at plus $33/mt to Far
“I feel that it would have just a short-term
East quotes or around $567/mt

impact on naphtha market,” said the source.

Propane assessment for H1 Mar, H2 Mar and

Over in Japan, the sustained rally in naphtha
H1 Apr slid down to $489/mt, $489/mt and
cracks has prompted the country’s refiners to
$459/mt, with the three cycles for LPG also
increase their naphtha production, which
declining to $534/mt, $534/mt and $499/mt
increased to 3.24 million barrels for the week
respectively, reflecting the dip in swaps value.

ended on Feb 4, a sharp increase of 20% on-

week, according to the Petroleum Association
Bullish sentiments continued for Feb-lifting
of Japan (PAJ).

barrels on the back of the tight supply in the

Middle East and spot demand emerged in
The yield of naphtha rose two percentage
South Asia.

points to around 14%, while the naphtha

stocks also increased 7.5% on-week to 10.15
India’s Bharat Petroleum Corp. Ltd. (BPCL)
million barrels.

was said to have secured three medium-sized

gas carriers (MGCs) of LPG for February
The sharp increase in Japanese refiners’
loading at premiums of around $60/mt to Feb
naphtha production is in line with the cracker
CP, said trade sources.

run-rates buy the country’s petrochemical

end-users.

© Oil Price Information Service (OPIS), an IHS Markit company. 8

 OPIS Asia Naphtha & LPG Report Tuesday, February 7, 2017

Challenging operations required due to the The rise in consumption of the gas resulted in a
prompt lifting schedule as well as the tight hike in LPG imports in the fourth quarter with
supply for the month were quoted as reasons the monthly average of 1.04 million mt, sharply
behind the spike in differentials.
higher compared to the year’s monthly average
of about 845,000 mt.

In addition, another source said that the

relatively smaller size of carriers also The trend of higher-than-usual demand in the
contributed to the boost behind the spot country typically continues in the first quarter of
differentials.
the year, with the peak demand usually easing
in April.

Robust demand from the country’s importers

lifted the current sentiments.
On the arbitrage front, interests stayed weak for
ex-US cargoes as EIA may report another fall in
As reported earlier, Indian Oil Corp. (IOC) had stocks, which may be lifting Mont Belvieu
secured around 100,000 mt of LPG via five prices.

MGCs from a European trading house for

February.
Propane stocks are expected to record another
drop in stocks, with estimation at about 3.5
In addition, fellow subcontinent importer, million bbl on average in the week ended Feb 3,
Hindustan Petroleum Corp. (HPCL) also according to OPIS U.S., as responses in an
emerged in the market seeking up to 39,000 mt OPIS survey ranged from minus 1.75 million to
of LPG on FOB basis for Feb 23-24 loading a decline of 4.25 million bbl.

from the Middle East.

The prediction of another stock-draw came

The Indian company was seeking 16,000 mt of after EIA’s report of propane stock reduction of
propane along with 23,000 mt of butane in a 5.6 million bbl in the week ended Jan 27.

tender, which closed earlier this week of which

the results were still not available.
Outright prices of LPG in the US, however fell
sharply, dragged down by the steep decline in
Overall, prompt demand from India had crude oil prices, amid concerns over rising
strengthened by between 160,000-200,000 mt, stocks of crude in the country.

strengthening demand for Middle Eastern

cargoes due to the proximity.
The non-TET propane prices also plunged to
around $411.59/mt and butane to around
India’s monthly average of LPG consumption $518.96/mt, leaving the arbitrage window shut
last year stood at 1.766 million mt, but that for despite the rally in CFR Far East prices on
the fourth quarter had been averaged at 1.89 Wednesday.

million mt, according to official figures.

© Oil Price Information Service (OPIS), an IHS Markit company. 9

 OPIS Asia Naphtha & LPG Report Tuesday, February 7, 2017

Far East players were thought to have a The price assessments for the 92, 95, and 97
bearish outlook on the arbitrage market due to RON gasoline closed at $66.19/bbl, $68.81/
the sharp uptick in Mont Belvieu prices, which bbl and $70.10/bbl respectively.

deteriorated the arbitrage margins,

commented one source.
Japanese refiners’ gasoline stocks decreased
2.7% to 10.47 million bbl as exports remain
Another source reckoned that some ex-US profitable for the week ending Feb 4,
cargoes may still flow East as supply from the according to Petroleum Association of Japan
Middle East is seemingly tight, although (PAJ).

limited spot trades are expected.

Gasoline output decreased by 4.2% to 6.22

The end of the heating season in the Far East million bbls as “refiners have maintained a
also post another challenge for the arbitrage healthy level of reserve in their storage,”
market, with the winter demand tapering off.
according to a trader.

The optimistic view is that the Far East CFR Gasoline yield continued to decrease, seeing
prices would continue to soar, which would 26.3%, which is the lowest in almost two
open up the arbitrage window, but several years as refiners do not see a need to produce
sources polled by OPIS were skeptical over it excessive before the demand picks up.

currently.

Japanese traders are actively looking for

On the shipping front, the freight rates on outlets due to the sluggish domestic demand
major routes from the Middle East to Japan during the winter season.

shed 86 cents to $28.50/mt.

“Gasoline exports are seen as profitable

Chartering rates for Algeria, West Africa and currently as refining margins are healthy,” a
Houston to Japan (via Panama) were trader said.

approximated at around $60/mt, $49/mt and

$62/mt, respectively.
Gasoline exports for the week were around
830,000 bbls, likely heading to the regional

GASOLINE
countries such as Singapore, Australia, China,
South Korea and Philippines.

Meanwhile, ENOC also sold a Feb 26-Mar 2

Separately, at least 235,000 mt of gasoline are
loading cargo to PetroChina at an outright
headed to Singapore in the week, according
price of $66.20/bbl to Singapore quotes,
to shipping sources.

which worked out to $11.55/bbl to naphtha

quotes.

© Oil Price Information Service (OPIS), an IHS Markit company. 10

 OPIS Asia Naphtha & LPG Report Tuesday, February 7, 2017

Meanwhile, a 30,000-mt gasoline cargo was to KenolKobil at $44.43/mt to the same

seen heading in an urgent manner towards quotes and basis.

Balongan port in Indonesia and will likely

arrive on Thursday.
CONDENSATE

“The gasoline cargo request seemed urgent,

• Robust demand from splitters offset by
as the tanker was chartered within a day,” a
ample light crude avails
shipping source said.

• Narrowing EFS injects pressure on DFC

Market players speculate that the gasoline • Additional supplies from Saudi may
cargo was procured to fill up the demand gap emerge in Q2
domestically due to the refinery turnaround.

Asia’s condensate demand from splitters

The 125,000-b/d Balongan refinery is currently continued to be strong, as the current
undergoing turnaround and is slated to restart feedstock economics between heavy full
operations by end February.
range naphtha and condensate continues to
be in favor of the latter, which is heard
Over in Africa, the Kenyan Oil Industry Pipeline widening further on the continued strength in
Co-ordination Secretariat was heard to have the naphtha market.

secured five cargoes of gasoline along with jet

fuel and gasoil for delivery over March and The differential for the Qatari deodorised field
April into Mombasa.
condensate (DFC) was assessed at around
$2.80-2.90/bbl premium to Dubai, while low
The 58,000-mt cargo for delivery into Kipevu sulfur condensate (LSC) took the second slot
oil terminal over Mar 27-29 and two 37,000-mt at $2.20-2.30/bbl premium.

cargoes for delivery into the same terminal

over Apr 4-6 and Apr 15-17 respectively are The South Pars condensate (SPC) spot
awarded to Total Kenya at $8.98/mt, $13.59/ differential was assessed at premiums of
mt and premium of 30 cents/mt respectively 30-40 cents/bbl, while that for the Australian
to Mediterranean quotes on CFR basis.
North West Shelf condensate (NWSC) ended
at 80-90 cents/bbl premiums to Dated Brent.

A 22,500-mt parcel which is co-loaded into a

35,000-mt cargo for delivery over Mar 15-18 Naphtha cracks to Brent continue to be firm,
to Shimanzi Oil Terminal is awarded to Galana averaging at $102.73/mt during the first week
at $21.02/mt to same quotes and basis.
of February, which would be $20.89/mt higher
compared with the same period a month
Lastly, a 7,785-mt parcel which is co-loaded earlier.

into a 35,000-mt cargo for delivery over and

Mar 15-18 into Mbaraki oil terminal is awarded

© Oil Price Information Service (OPIS), an IHS Markit company. 11

 OPIS Asia Naphtha & LPG Report Tuesday, February 7, 2017

In the similar extent, gasoline cracks to Dubai of condensate is currently sailing from Mellitah
also remain steady, with 92-RON crack to Daesan, which is expected to arrive on Feb
averaging at $11.71/bbl during the first week 22.

of the month, $0.88/bbl higher than the same

period last month.
Daesan is home of Hanwha Total ‘s 148,000-
b/d condensate splitter and Hyundai
Robust naphtha demand from the region’s Chemical’s 130,000-b/d condensate splitter.

end-users was seen boosting condensate

sentiments, while the rally in petrochemical Looking ahead in the second quarter of the
products ranging from C2 to C4, as well as year, the possibility emerged that more
aromatics such as benzene and paraxylene condensate volumes may be available from
(PX) prices have also enabled most Saudi Arabia, as Saudi Arabian Oil Co.
condensate splitters in the region to run at (Aramco) was heard to conduct maintenance
high operating rates.
at its Ras Tanura refinery in May for about 40
days, trade sources said.

The availability of ample light crude supplies

was, however, still limiting additional The scheduled turnaround would include a
condensate demand that could emerge from 225,000-b/d condensate splitter, which is
the refiners, as light crude is deemed more expected to be taken offline.

attractive to feed into their refining facilities.

Based on OPIS calculation, about 9 million bbl

The trend of lower differentials for light crude of condensate of demand loss would be
oil in the Middle East typically weighs on the created, part of which could be offered by
Asian condensate demand, as refiners can Aramco provided that the firm undergoes a
take both the light crude oil and condensate 40-day turnaround at tis Ras Tanura splitter.

into their refining facilities, depending on

economics.
The splitter, which is fed with Khuff
condensate, produces naphtha, liquefied
Meanwhile, the continuously narrowing Brent- petroleum gas (LPG), kerosene and light and
Dubai exchange of futures for swaps (EFS) heavy gas oil.

may inject further pressure on the Qatari

barrels, a positive factor for Brent-linked While it still remains to be seen how much
condensate barrels, possibly from the West.
volumes would be offered by the Gulf
producer, some trade sources suggested that
On Wednesday, for instance, the spread the actual volumes that could be offered
between Brent and Dubai ended the session would be lower than 9 million bbl, as the
at $1.47/bbl based on 4:30PM in Singapore.
refiner is able to use Khuff condensate for
blending and may also attempt to stockpile
As reported previously, a vessel named some barrels during the turnaround.
Sauger chartered by Vitol carrying 60,000 mt

© Oil Price Information Service (OPIS), an IHS Markit company. 12

 OPIS Asia Naphtha & LPG Report Tuesday, February 7, 2017

“Even if they offer some barrels of Khuff In addition, TonenGeneral Sekiyu K.K was also
condensate, it won’t be that cheap,” said a heard to have already raised operational rates
trade source.
of the fire-hit Wakayama refinery to “almost
full capacity,” said a company official.

The other end-user, however, said that there is

still a possibility that Aramco would offer some The source also said that the refinery has been
volumes of Khuff condensate similar to DFC under investigation by Police and Fire
levels, depending on market conditions, which department over Feb 7 to Feb 10.

in this case, the impact would be quite

significant.
The firm’s 132,000-b/d Wakayama refinery
located in Arida city suffered from the fire

REFINING NEWS which broke out on Jan 22, which started from
the lubricant oil processing facility.

The overall refinery operational rate in Japan

The incident resulted in suspension of
for the week ended Feb 4 recorded a rise after
shipping operations, and also caused the
a brief fall in the indication, ending the week at
refinery operational rate to be reduced to a
93.7%, up by 1.7%, according to data from
minimum level, which however was raised
Petroleum Association of Japan (PAJ).

since then.

Possibility had emerged that the overall

As reported earlier, speculations were made
production of the refined products in the
that it would not take a long time for the
country at the end of January in line with the
refiner to push operational rates of the refinery
refinery troubles occurred, possibly below to
to full tilt with main units of the refinery heard
the 90% bar, which was to be the first time
not damaged by the fire.

since Dec 3 last year.

As a result of the rise in crude-run rate, the

This has, however failed to come into reality,
Japanese refiners processed a total of 24.84
possibly on the back of the other refineries in
million bbls of crude oil over the week, which
the country ramping up.

is around 1.8% higher on-week.

Idemitsu Kosan has already been running its

The yields for light ends increased 2% to 40%
Chiba refinery at almost full capacity,
on the back of higher production of naphtha,
according to a company official.

while that for middle distillates inched down

by a percentage to 40%, dragged down by
Operational rates of the 200,000-b/d Chiba
the falls in kerosene/jet fuel yields.

refinery had been reduced to a minimum level

of around 30-40% in end January after a fire
broke out at a 50,000-b/d desulfurization unit
used for jet fuel and kerosene.

© Oil Price Information Service (OPIS), an IHS Markit company. 13

 OPIS Asia Naphtha & LPG Report Tuesday, February 7, 2017

Kerosene production yield fell to the lowest

since Dec 17 last year, ending the week at
13.3% of yield, down by 1.8% on-week, which
may signal that Japanese refiners were
adjusting the kerosene yields down with winter
demand tapering off.

Meanwhile, as of 4:30 pm in Singapore, Brent

futures stood at $54.74/bbl, down by 95
cents/bbl, while that for Dubai and U.S. West
Texas Intermediate (WTI) crude were trading at
$53.27/bbl and $52.33/bbl, down by $1.14/bbl
and $1.28/bbl, respectively, all for the month
of April.

The spread between Brent and Dubai widened

by 19 cents, ending the session at $1.47/bbl,
while that for Dubai and WTI continued to be
wider by 14 cents to 94 cents/bbl,
encouraging the U.S-origin barrels to flow into
the East.

The relative weakness in the U.S. crude

continued to be seen, as market participants’
concerns over growing stockpiles in the
country spread.

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© Oil Price Information Service (OPIS), an IHS Markit company. 14