NWE reformate exports to Asia tighten aromatics stream, support gasoline

26-Feb-16

Exports of reformate from Europe to Asian buyers have led premiums for petrochemical products in the aromatics stream, such as toluene and mixed xylenes, to spike; as traders scramble for product in a tight market, as per Platts. Reformate, toluene and mixed-xylene are octane boosters used in gasoline blending, and part of the aromatics stream. Earlier this week, 1,000 mt of toluene traded at a US$180/mt premium over Eurobob gasoline for prompt delivery before the end of February. This premium is regarded as high, as toluene is usually observed trading around a premium of US$100/mt to Eurobob. Toluene's premium to the March Eurobob gasoline swap was assessed at US$171/mt on Wednesday, unchanged on the day. MX's premium was assessed at US$165.50/mt, also unchanged. Over the course of February, the toluene and MX premiums over the March Eurobob swap have risen by US$44/mt and US$40.50/mt, respectively. The surge in spot prices for toluene and mixed xylenes is largely driven by export demand to Asia at present, sources said this week. "Mixed aromatics are still in the driving seat for spot toluene," said one Europe based chemicals trader. According to an aromatics producer, the reformate and mixed-aromatics arbitrage to China is expected to remain open for most of March. "There is strong demand from China for TX streams and reformates. You can receive very high and unusual premiums above Eurobob," said the producer. Around 80,000 mt of reformate is scheduled to load in the Baltic for Singapore on February 29, while a further 40,000 mt is reported to be due to load in the Amsterdam-Rotterdam-Antwerp region for China on February 28. Furthermore, a 40,000 mt reformate cargo is scheduled to load in ARA for China on March 10-15. Reformate was also the main element of support in the Northwest European finished-grade gasoline complex, as arbitrage to the US Atlantic Coast and West African demand for finished-grade gasoline remained marginal. In addition, the gasoline market was impacted by barge delays in the Amsterdam-Rotterdam-Antwerp area and interest to empty tanks of the higher Reid Vapor Pressure material ahead of the seasonal switch to summer-grade gasoline. "Reformate going to Asia is the only support to the gasoline market," said a trading source in Platts. Eurobob gasoline barges were assessed at $328/mt Wednesday, up from $315/mt Tuesday.