Europe to Asia naphtha arb open, fixtures due

14 January 2008 15:07  [Source: ICIS news]

LONDON (ICIS news)--The Europe and Mediterranean to Asia naphtha arbitrage window is open and fixtures are expected very soon, traders and brokers said on Monday.

 

The arbitrage window from west to east, which has been deliberated over for the past week, was said to be firmly open after a $30/tonne price spread has opened up between the regions.

 

European open spec naphtha was assessed $830-835/tonne (€558-561/tonne) CIF (cost, insurance and freight) NWE (northwest Europe).

 

In Asia, first-half March material was traded at $860-861/tonne CFR (cost and freight) Japan.

 

The price spread made exports from the Baltic and the Mediterranean workable, one trader said.

 

“It’s open and I expect something to move from the Baltic/Norway,” one London-based naphtha trader said.

 

The crack spread, which illustrates the naphtha premium over crude oil values, was reported at $1.80/bbl, significantly stronger than values one week ago, when the spread was heard as low as $0.25/bbl over crude.

 

The rising crack spread showed the market was gaining strength over crude, which has been falling consistently during the past seven days.

 

Buying interest was likely to have arisen from players trying to work the arbitrage window, one trader said.

 

Traders and brokers, however, emphasised that although the arbitrage window was open the task of exporting naphtha to Asia remained a challenge.

 

The right carrier ship would have to be found and material would have to be loaded in a timely fashion. Frequent loads and backtracking could also accumulate costs, rendering a trade unprofitable.

 

($1 = €0.68)

 

By: Kawai Wong
+44 20 8652 3214

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