
Record global butane flows likely to douse current butane price premiums
Global butane prices are exhibiting strength relative to their regional propane counterparts, but robust exports could cap this strength

Asia's naphtha cracks are facing growing headwinds from slowing gasoline blending and petrochemical feedstock demand.
Asia’s naphtha cracks have been steadily rising since April, bucking the trend of softening transportation fuel cracks. A seasonal switch in cracker feedstock from LPG to naphtha and strong aromatics margins (until September) have bolstered market fundamentals. However, growing headwinds are weighing on naphtha cracks. Regional aromatics margins have begun to retreat in recent weeks, while reforming margins have faded since the end of the Western hemisphere peak summer travel season. Northeast Asia’s ethylene cracker margins are also under pressure, with potential run cutbacks looming. Naphtha imports into Asia in the first half of October have declined for a second consecutive month to 2.1mbd, with Japan and Singapore leading the m-o-m drop. Russian naphtha arrivals have rebounded to over 330kbd this month, with imports into Singapore hitting a 9-month high of 96kbd. However, Russian supplies to Asia will likely slow over Nov/Dec as the country’s naphtha exports are on track to reach a seasonal low this month, with about 900kbd of refining capacity taken offline for maintenance. No naphtha cargoes have been loaded from major Russian ports like Vysotsk and Nakhodka so far in October. The declines from Russia are offset by rising supplies from the Med, with volumes loaded to Asia in 1H Oct climbing to a 9-month high of 200kbd.
Asia's naphtha imports by origin region (kbd)
Soft LR tanker freight rates have also provided relief for Asia’s naphtha buyers amidst rising naphtha prices. TC5 MEG-to-Japan LR rates are currently near the bottom of their historical range, about one-third of January’s levels. Declining LR utilisation on MEG-to-Asia trade route as well as ample global LR supply tonnage that has faced stiff competition from supertanker clean-ups are expected to keep LR rates subdued, unless there is a significant demand recovery by year-end.
MEG-to-Asia LR utilisation for naphtha (no. of vessels, LHS) and TC5 rates ($/t, RHS)
Six new naphtha-based ethylene crackers are scheduled to come online in China between Q4 2024 and 2025 (Argus), with one of Yulong refinery’s crackers expected to start up next month. As Yulong's crackers are taking their feedstock from the refinery, the start-up will not boost the country’s naphtha imports. The start-up timeline of the remaining crackers is less certain, challenged by weak margins. However, several of the independent crackers may provide upsides on China's naphtha imports when they come online next year.
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Global butane prices are exhibiting strength relative to their regional propane counterparts, but robust exports could cap this strength
India crude imports fall in August due to lower arrivals into Nayara Energy refinery. We expect crude flows into India to rise in September and October.
Global distillate margins showed remarkable strength this summer, with levels unseen since Feb 2024. Meanwhile, gasoline margins had to wait until August.
Head of APAC Analysis