Venezuela to Europe naphtha sparks market fears

02 August 2007 12:23  [Source: ICIS news]

LONDON (ICIS news)--In a rare arbitrage 28,000 tonnes of naphtha have been fixed from Venezuela to Europe, prompting fears among traders on Thursday of a new supply route putting downward pressure on the market.

The deal was fixed by commodity trader Trafigura and the cargo was expected to arrive on European shores on Wednesday 8 August.

Pricing details were not available as the cargo has already been sold on. Traders said that a European major had bought it but this could not be confirmed.

Fixing a cargo from Venezuela to Europe is highly unusual. Talk of a possible trend and a flotilla of material from there was worrying European-based naphtha traders, sources said.

However, a Norway-based trader said this fixture was likely to be a one-off trade but he added that if more material arrived from Venezuela it would increase supply in Europe and set downward pressure on an already depressed market.

The market has weakened in recent weeks due to lacklustre demand from both petrochemical end-users and gasoline producers.

Arbitrage options from Europe to Asia have been closed since May and were unlikely to reopen as Indian producers have increased their exports to neighbouring countries in recent months.

Open-spec naphtha prices were last assessed by global chemical market intelligence service ICIS pricing at $645-655/tonne CIF (cost, insurance and freight) NWE (northwest Europe) based on a crack spread at minus $2.40/bbl to minus $2.20/bbl.

By: Kawai Wong
+44 20 8652 3214

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