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Market Overview
Naphtha
Asian naphtha market saw a temporary weakness with influx of arb cargoes and even some Middle East cargoes making their way unexpectedly out of the Strait of Hormuz.
However the fundamentals in the East remains tight – petchems structurally need Middle East naphtha imports to run at levels pre-crisis and domestic refining runrates cannot meet this feedstock shortfall.
The naphtha exports from the Middle East is unlikely to resume in full swing even after the SoH is reopened because of repairs required at refineries that were struck by missiles.
Thus we anticipate higher E/W from July onwards.
MOGAS
Mogas cracks has upside potential as we head to summer with limited VGO needing to fulfil both diesel and mogas demands. Watch out on US export ban that can push this up even higher.
June Sing 95/92 has dropped to 2.2$/bbl levels buoyed by higher availability of aromatics in the market for mogas blending.
Australia which is a key high-RON outlet has sufficient stocks.
Houston arbs have been shut to Australia with very weak Gas E/W and cheap blend cost into Singapore.
Singapore to Rosarito arbs are also wide open.
