April Recap - Asia & Middle East Light Ends

Asia and Middle East light ends held near March's crisis highs in April. Regional product cracks remain high against both Dubai FOB Partial Cargoes and Dated Brent NWE FOB. How far product prices have moved relative to crude reflects both their essentiality to the region and how much of their supply remains trapped in the Middle East. Naphtha cracks (+$10.12/bbl avg vs -$17.00/bbl in March) outperformed gasoline and LPG due to physical scarcity. While propane trades at a deep discount to naphtha (-$148/mt avg), supply remains tight and Asian PDH (Propane Dehydrogenation) plant capacity is reduced to below 60%, making run-rate cuts the binding constraint rather than feedstock economics.

Market Activity

• Saudi Aramco Term Loading Disruptions: Aramco cancelled May LPG loadings at Juaymah terminal; all Middle East window activity basis Yanbu loading only.
• ​Nationalised Prioritisation: Regional governments mandating domestic refiners prioritise local fuel needs over export market to maintain social stability; naphtha production deprioritised behind gasoline and residential LPG.
• ​Inflated Landed Cost: Total costs driven higher by surging clean tanker freight rates and war-risk insurance premiums:
  
  • Panama Canal southbound auction fee hit record $4M in mid-April, surpassing prior record of $3.975M set during November 2023 drought. An early May southbound slot cleared at $3.081M, indicating fee remains elevated.
  • ​USGC-Japan VLGC benchmark freight rate reached multi-year high of $243.50/mt (28-Apr).
• ​Supply Pivot and Time-Lag: buyers shifted to USGC or African sources; extended Cape of Good Hope voyages created a temporary physical supply gap that began to bridge mid-to-late April.
• ​South Korea Government Support (15-Apr): launched petrochemical industry stabilisation project to subsidize 50% of the price spike for critical feedstocks including naphtha, LPG, and condensate, as well as basic chemicals like ethylene and propylene. The project aims to safeguard essential goods and medical supplies by diversifying procurement to routes bypassing the Strait of Hormuz.
• ​Petrochemical Constraints: high feedstock prices and cargo scarcity limited viability of increasing run rates at crackers and PDH plants despite improved petrochemical margins from supply cuts:
  
  • PDH run rates fell below 60% in April, driven by feedstock shortages and market uncertainty​.

Price Action

• ​Gasoline SG 92 RON — +0.8% open-to-close:
  
  • ​Opened $133.46/bbl (1-Apr); high $142.65/bbl (2-Apr); low $117.92/bbl (21-Apr); closed $134.47/bbl (30-Apr).
  • Talin refinery fire (6-Apr, 80,000 b/d RFCC shutdown), primary unit for converting heavy oil into gasoline components, created brief buy panic but failed to sustain.
  • Crack (Prompt) vs Dubai: avg +$21.98/bbl vs -$0.99/bbl in March (crack turned positive); closed $22.22/bbl (30-Apr).
  • ​MoM: $1,031.20/mt vs $994.82/mt (+3.7%); YoY vs Apr-25 $570.90/mt (+80.7%).
• LPG — butane outperformed propane; propane -3.6% open-to-close, butane -0.9% open-to-close:
  
  • Propane FE CFR 23kt (GX0000874): opened $919.25/mt (1-Apr); 8-Apr drop -$86.50/mt (-9.1%); monthly low $781.25/mt (21-Apr); closed $896.75/mt (30-Apr).
  • ​Butane FE CFR 23kt (GX0000876): opened $949.25/mt (1-Apr); 8-Apr drop -$83.50/mt (-8.5%); monthly low $819.25/mt (21-Apr); closed $946.75/mt (30-Apr).
  • ​MoM: Propane avg $879.98/mt vs $890.97/mt (-1.2%); Butane avg $919.23/mt vs $888.28/mt (+3.5%).
  • May Aramco CPs announced at $750/mt for propane and $800/mt for butane — rolled over flat from April CPs, in line with market expectations and swaps indication; unchanged level considered elevated, reflecting the conflict in the Middle East and high crude prices.

Cross-Market Dynamics

• Naphtha Japan CFR vs Dubai crack averaged +$10.12/bbl in April vs -$17.00/bbl in March; opened +$13.83/bbl (1-Apr), closed +$11.68/bbl (30-Apr). Structural tightness persists; government measures provide buffers but do not resolve the underlying supply deficit: Japan confirmed a four-month supply buffer, while South Korea secured 2.1 million tons of alternative-route naphtha by year-end and banned exports to safeguard domestic production.
• ​Gasoline SG 92 RON vs Brent crack averaged +$4.83/bbl vs +$24.32/bbl in March (-$19.49/bbl, -80.2%); went negative W2-W3 before recovering to +$11.00/bbl (30-Apr). While gasoline prices remain bullish given tight supply, weak demand from consumers offsets upside.
• ​C3/C4 spread — ME Propane vs Butane CP Swaps (GX0000899 Month 1):
  
  • ​Opened -$30/mt (1-Apr), steadily widened to -$55/mt (29-Apr), closed -$50/mt (30-Apr); April avg -$38.50/mt vs March avg +$5/mt.
  • ​Structural inversion deepened through the month as forward market priced in sustained butane scarcity beyond the current CP period; Middle East primary butane source.
• ​Propane FE vs Naphtha Japan CFR (GX0011849):
  
  • Propane-naphtha switching window narrowed, though actual supply constraints prevented full utilisation.
  • April avg -$148.48/mt vs -$270.50/mt in March (+$122.02/mt, propane discount to naphtha narrowed as naphtha fell more than propane on absolute basis).
  • ​Propane remaining deeply discounted to naphtha (-$148/mt avg) incentivises maximum feedstock switching for flexible crackers; run-rate cuts the binding constraint, not economics​.

Cross-Regional Dynamics

• ​​MEG LR1 vs MOS physical diff: avg +$183.28/mt vs +$196.41/mt in March; high +$287.96/mt (6-Apr); low +$109.64/mt (21-Apr); closed +$151.98/mt (30-Apr) — structural premium intact as Hormuz remains closed.
• ​Singapore FOB naphtha ($1,082.80/mt avg) commanded $170.10/mt premium over MEG LR1 ($912.70/mt) — East Asia buyers paying up for non-Middle East origin.
• ​Singapore 92 RON vs E5 (Month) averaged -$0.32/bbl (Mar: +$4.31/bbl), closing at -$3.09/bbl; arb closure eliminated traditional eastbound flow.
• ​LPG: India shifted from Middle Eastern to US supply; select vessels transited Hormuz in the final week, primarily Indian-flagged under sanctions waiver.
• ​Elevated logistics costs, including high freight rates, steep Panama Canal fees, and extended transit times for cargoes diverted via the Cape of Good Hope (+10–15 days), continued to inflate landed costs for Asian buyers, with freight and insurance components alone adding an estimated double-digit percentage to delivered prices.​

Curve Structure

• ​​Gasoline SG 92 RON FOB Swaps (GX0010996) — market loosening at the front, supply concern easing:
  
  • ​Backwardation flattened: M1-M2 compressed from +$9.20 to +$5.35/bbl, M1-M6 from +$31.06 to +$26.26/bbl — prompt tightness pricing unwinding as demand destruction limits upside.
  • Back end repriced harder than front (M6 +$9.98/bbl vs M1 +$4.82/bbl); market is pricing sustained long-term supply shock.
• Naphtha Japan CFR Swaps (GX0010995) — tightening structural signal; back end independently repricing.
  
  • ​Backwardation steepened at the long end: M1-M6 widened from +$202.16 to +$215.38/mt — structural supply disruption priced well beyond the prompt, confirming physical shortage is not seen as short-lived.
  • M1-M2 at +$65.50/mt; M1-M2 peaked intra-month at +$82.25/mt (27-Apr) before compressing — roll pressure at the front; long-end steepening more telling of the fundamental picture.
• ​Propane FE CFR Swaps (GX0000884) — loosening at the long end; acute panic priced out:
  
  • Deep backwardation flattened: M1-M6 compressed from +$146.10 to +$141.79/mt; back end rallied 6x harder than prompt (M6 +$68.31/mt vs M1 +$64.00/mt.
  • Market beginning to price in eventual supply restoration via USGC rerouting; prompt still tight but long-end urgency reduced.

Price Volatility

• ​March was the volatility peak across all five products; April pulled back sharply but remains 3-5x pre-conflict (Nov-Feb) levels.
• Naphtha MEG LR1 at 9.56% remains most volatile, consistent with $291.59/mt intra-month range ($771.14 to $1,062.72/mt).
• Single-day crash on 8-Apr and 21-Apr monthly lows dominated CV; underlying directional trend was downward with late-month recovery.

Something to Watch

• ​Market participants to continue monitoring Saudi Aramco June nominations as indicator of whether repairs at Juaymah terminal's pipeline and war damage are progressing.
  
  • ​Juaymah is the primary Saudi Aramco LPG loading terminal; its suspension forces all Middle East volumes through Yanbu, constraining loading flexibility and sustaining prompt backwardation in ME CP swaps, any further delay extends the structural tightness already priced into the June delivery window.
  • Monitor: first June loading nominations from Aramco term customers; absence of nominations by mid-May signals extended suspension and a second leg of prompt tightening in ME CP swaps.
• ​US LPG exporters are beginning to shift from full propane to mixed propane-butane cargoes, providing much-needed relief for Indian importers who are heavily LPG short residential needs. BPCL and IOC have both successfully secured mixed cargoes for June loading.
  
  • Mixed cargoes directly address India’s butane deficit that pure US propane exports cannot fill; if volumes scale, this partially relieves the structural C3/C4 inversion that drove the April M1 spread to -$55/mt.
  • ​Monitor: whether the C3/C4 M1 spread (closed -$50/mt, 30-Apr) narrows sustainably above -$30/mt, a sustained move would signal meaningful butane supply relief reaching the market.
• The Strait of Hormuz remains closed to commercial tanker traffic, underpinning all pricing across this section; any reopening signal will trigger a sharp unwind in MEG physical premiums and M1-M2 backwardation.
  
  • A Hormuz reopening would simultaneously collapse MEG LR1 vs MOS premiums (currently +$151.98/mt), unwind naphtha backwardation, and trigger a sharp propane FE selloff as Middle East supply re-enters the market — the scale of the unwind would be proportional to how quickly transits resume.
  • ​Monitor: diplomatic developments between Iran and regional/Western parties; watch MEG LR1 vs MOS diff as the most sensitive real-time indicator, any compression below +$100/mt would signal materially improved Hormuz transit expectations.​

Note: All figures, prices and market activity referenced in this report are based on the period 1–30 April.