Asia naphtha inter-month spread narrows to $1/t

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) Japan late Wednesday after hitting $931/tonne late last week.

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.  

 

By: Desmond Chia
+65 6780 4359

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly