Asia naphtha backwardation spread narrows to $3/t

10 April 2008 08:16  [Source: ICIS news]

SINGAPORE (ICIS news)--The inter-month backwardation spread for Asian naphtha has slimmed further and the spread for the second half of May/second half of June was seen at $3/tonne on Thursday on anticipated weak demand from northeast (NE) Asian end-users, industry sources said on Thursday.

The inter-month backwardation spread was around $5/tonne last week, they added.

Adding pressure to the weak demand was the fact that South Korean cracker operators had mostly covered their May requirements and the few who had not, were deferring purchases till prices softened, market sources said.

Liquefied petroleum gas (LPG) was also being used as an alternative feedstock instead of naphtha due to better economics.

Asian naphtha prices for the second half of May contract opened notionally at $933-936/tonne CFR (cost and freight) Japan on Thursday, up $15.75/tonne over Wednesday boosted by record high crude prices.

By: Desmond Chia
+65 6780 4359

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