26 October 2007 05:50 [Source: ICIS news]By Nurul Darni
SINGAPORE (ICIS news)--Crude-sensitive Asia naphtha surged to another fresh record high of $800/tonne CFR (cost and freight) Japan along with downstream aromatics and palm oil futures, after benchmark US crude futures hit a new high on Friday morning in Asia.
Open spec naphtha prices in Asia for first half December contract rose by as much as $18/tonne from Thursday’s close to trade at $798-801/tonne CFR Japan, brokers said. The second half December contract also gained sharply at $799-802/tonne CFR Japan.
Crude gains lifted downstream benzene and toluene prices in Asia, which rose about $10-25/tonne on Friday morning, traders said.
"It’s a crude-driven story today, even though there is more than ample supply in the market [for naphtha]," a broker in Singapore said.
NYMEX crude for December delivery rose to a new all-time high of $91.10/bbl on early Friday morning during Asia’s trading session, boosted by supply shortage concerns ahead of winter.
Despite rallying open spec naphtha prices, the market’s own fundamentals were in fact weaker and led to sharp discounts for November delivery cargoes sold in the physical market this month due to a supply glut.
Asia has seen rising naphtha exports from India in the past few months this year – with volumes reaching as high as 1m tonnes for September and October respectively – as industrial consumers in India switched to cheaper natural gas over naphtha.
Downstream benzene prices rose by about $10/tonne to $1,045-1,055/tonne FOB (free on board) Korea. Two deals were heard concluded in rapid succession at $1,046/tonne and $1,050/tonne FOB Korea for big berth any December loading parcels, $5-9/tonne higher than yesterday’s deal.
By midday, bids for December loading parcels hovered at $1,050-1,052/tonne FOB Korea, indicating an upward swing in buying interest. Traders said the aromatics market was likely to track the energy market closely during the course of the day, and could strengthen further.
Toluene prices saw more substantial gains on the back of firmer offers, although buying interest was limited. Prices were notionally assessed $20-25/tonne higher at $910-920/tonne FOB Korea, as an offer was heard for any December loading at $925/tonne FOB Korea. No bids were heard.
Buying interest surfaced for January loading cargoes with bids heard at $905-910/tonne FOB Korea. An offer was heard for January at $920/tonne FOB Korea.
A Singapore-based trader said that regional aromatic buyers were waiting at the sidelines and were wary of taking risks given the current volatility in crude and naphtha values.
Asian styrene monomer (SM) prices gained further ground on the back of crude as buy-sell indications for any December parcels rose $10/tonne to $1,350-1,360/tonne FOB Korea.
A fixture was detected at $1,355/tonne FOB Korea for any December lifting. In eastern China, domestic offers firmed yuan (CNY) 50/tonne ($6.7/tonne) to CNY12,250/tonne ex-tank but buying interest remained sedate.
Meanwhile, crude palm oil futures also rose sharply on crude. Benchmark 3rd month crude palm oil futures on the Bursa Malaysia surged by ringgit (M$) 66/tonne ($19.7/tonne) to M$2,773/tonne on Friday morning, owing to speculative buying as well as booming soyoil futures traded on the Chicago Board of Trade (CBOT) overnight.
December soyoil futures rallied 44cents/lb ($9.68/tonne) to close at $40.92/lb at the CBOT's close last night, buoyed by the higher crude values which have made soyoil biodiesel a more attractive option to refined oil products, vegetable oil traders said.
Mahua Mitra, Clive Ong and Jeremiah Chan contributed to this article.
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