Asia's gasoline crack tanked for a third session to a 27-month low on Monday at $1.78 a barrel while the Asian naphtha margin also fell, hitting its lowest in nearly nine months at $58.60 a tonne as abundant supply battered the light ends market.
The situation is not expected to improve for sellers any time soon, with refiners unlikely to cut runs because of demand for middle distillates and fuel oil. China, for instance, is expected to sell more gasoline overseas after refiners were given additional export quotas.
"Our product balances certainly point towards continued length and significant stock builds over the winter, which would in turn keep gasoline cracks weak into first quarter of 2019," said JBC when asked by Reuters about petrol fundamentals.
Weakness in gasoline has also affected naphtha, which is a blending component for gasoline as well as a feedstock for petrochemicals. Sellers would rather sell naphtha than use it to make gasoline in the current market, adding to naphtha supplies and dragging down spot prices to discount levels. Malaysia-based Titan, for instance, bought naphtha for December arrival at Pasir Gudang on Friday at a discount to Japan quotes on a cost-and-freight (C&F) basis.
That was in the same week that Japan and South Korea also paid discounts for naphtha scheduled for delivery in the first half of December. Taiwan's CPC has emerged this week as a buyer of full-range naphtha for Dec. 5-25 arrival at Kaohsiung through a tender closing on October 30.
India's MRPL has an outstanding tender to sell 35,000 tonnes of naphtha for loading in the second half of November. ADNOC is likely to have sold spot naphtha for November loading from Ruwais at a premium in high single digits against its own price formula on a free-on-board (FOB) basis. The deal could not be confirmed independently. ADNOC has been selling spot cargoes for September, October and now November. It does not usually sell spot cargoes because it has long-term contracts with buyers.