With the US driving season having come to an end, a pillar of support also breaks away for Asian gasoline cracks. But regional fundamentals and strong petchem operations are set to keep gasoline cracks supported.
Firm naphtha demand and discount to LPG prices has boosted naphtha volumes. At the same time LR2 tankers are involved in trades of other products, letting LR1 to gobble up market share out of the Middle East.
As we witness global naphtha cracks continuing strength since the spring, we can see that seaborne naphtha imports carry on their impressive recovery. Strong flows are expected to continue on the back of firm petrochemical demand East of Suez and European gasoline blending.
What are the dynamics behind this dirty-to-clean shift and what is the impact on the product and crude tanker markets?
Despite a really strong, unseasonal LPG price hike, VLGC rates are following a different path. Vortexa attempts to shed a light on this divergent pattern.
Vortexa uses flows data to illustrates how strong gasoline demand combined with steep petrochemical demand feedstock is driving up the demand for naphtha, making refiners max light end yields at the expense of middle distillate.
Elevated naphtha exports from Europe supported long-haul voyages in favour of LR2 tankers. Yet, will this trend contribute to uplift LR2 freight rates?
Vortexa outlines how naphtha has had a strong demand recovery but increasing demand for road fuels gasoline and diesel could incentivise refiners to adjust their yields to make less naphtha.
As naphtha continues to find outlets towards the East, LR2 utilisation is on the rise in March, helping resurrect rates from multi-year lows. But widening LPG discounts to naphtha are expected to put a lid on Asia's naphtha imports in the coming months.
The cold snap in North Asia ensured steady LPG export demand throughout January even as US propane prices reached their highest levels in over two years.
Asia’s growing naphtha demand has outpaced arbitrage supplies in December, but higher exports from key suppliers should cap further upsides on naphtha cracks.
LR tanker rates are rallying higher following a strong month of October-loading naphtha exports from the Mediterranean and the Mideast Gulf heading East, with the momentum set to continue in November.