Europe naphtha tops $700/t on high crude prices

11 July 2007 13:15  [Source: ICIS news]

LONDON (ICIS news)--Strong crude values are keeping naphtha prices above $700/tonne but lacklustre demand had led to a narrowing of the crack spread, traders said on Wednesday.

 

Open-spec naphtha was last assessed at $703-708/tonne CIF (cost, insurance and freight) NWE (northwest Europe), marginally down from the previous day’s close at $707-713/tonne CIF NWE.

 

The July crack spread was seen weakening as the naphtha market failed to keep up with the strength of the crude market after demand from gasoline blenders eased, partly due to a lack of arbitrage options from Europe to the US.

 

The crack spread, which offers an indication of the naphtha premium over crude, has weakened from a high of $4.50/bbl last week down to $2.20-2.50/bbl heard on Wednesday morning.

 

Supplies remain ample in Europe.

 

For the first five months of 2007, Europe and Mediterranean material was steadily being exported to Asia, but fewer arbitrage options were now also affecting naphtha prices.

 

With increased Indian exports to the rest of Asia easing supply concerns in the region, this window has been largely closed since May.

 

The Europe to US arbitrage window opened briefly during the final week of June, but traders reported that only a small amount of material was fixed to the region and the spread between the regions has since caught up, preventing further exports.

 

The near-term outlook for naphtha was unclear. Profit-taking in the crude market could force downward pressure on the European naphtha market, analysts said.

 

By: Kawai Wong
+44 20 8652 3214

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly