Asia naphtha inter-month spread still widening

23 April 2008 09:28  [Source: ICIS news]

SINGAPORE (ICIS news)--Asian naphtha inter-month spreads continued to widen to $1.75/tonne on buying from northeast Asian end-users this week, industry sources said Wednesday.

Early this week, spreads widened to $1.50/tonne due to a sudden surge in demand from northeast Asian end-users as they lent support to the market by snapping up cargoes for June delivery.

Second half of June/second half of July spreads were seen at $2.00/tonne.

Backwardation between the first half of June and first half of July had seen margins narrow from the beginning of the month at $5.00/tonne to $1.00/tonne at the end of last week.

Taiwan's Formosa Petrochemical Co (FPCC) which originally sought 75,000 tonne of open spec naphtha, snapped up about 200,000 tonnes for delivery in the second half of June.

“FPCC’s big purchase really supports the market which has been weak for the past month. But this may be not persist as the cargoes are sold at such hefty discounts,” a trader said.

FPCC bought the cargoes at around discount of $2.50-3.00/tonne to Japan quotes CFR (cost and freight) Taiwan.

A Korean end-user reportedly just covered its full range naphtha requirement for first half of June at a discount of $1.25/tonne to Japan quotes CFR Korea. The price equates to a discount of $2.50-3.00/tonne CFR for an open spec cargo.

However, the naphtha markets still lagged crude as prices in the former have gained 4.79% from the start of the week against a gain of 5.26% in the Brent crude markets.

By: Desmond Chia
+65 6780 4359

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