17 April 2008 04:59 [Source: ICIS news]
SINGAPORE (ICIS news)--Asian naphtha inter-month spreads continue to crunch and have narrowed from $1.50/tonne to $1/tonne this week due to weakness in the market, industry sources said on Thursday.
The backwardation between first half of June and first half of July had crunched from $5/tonne at the beginning of the month to $3/tonne last week, they added.
The gains in the naphtha markets remained weak against the gains in the crude oil markets and naphtha rose by 2% this week as opposed to a rise of 2.71% in the Brent crude markets.
Some northeast Asian end-users were trying to increase their usage of liquefied petroleum gas (LPG) as a feedstock instead of the highly-priced naphtha.
Naphtha prices hit another record high of $942/tonne CFR (cost and freight) ?xml:namespace>
Demand for naphtha as feedstock had weakened as high costs and poor margins from downstream derivatives kept South Korean cracker operators at bay.
South Korean end-users had mostly covered their May requirements and some were now seeking June cargoes but were likely to wait till prices softened, market sources said.
“End-users will be put off by the high fixed costs of naphtha and they will continue to wait,” a source noted.
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