Europe exploits Asia demand for naphtha arbs

28 April 2008 10:43  [Source: ICIS news]

LONDON (ICIS news)--The Europe-to-Asia naphtha arbitrage window continued to see activity on soaring Asian demand, with Glencore reported to have fixed a 75,000-80,000 tonne cargo last week, market sources said on Monday.

The material, which is set to load on the Aganthanissos in the first half of May, was the second European naphtha cargo fixed last week. The previous shipment was fixed by Vitol for 60,000 tonnes for planned loading on Monday.

The current rise in arbitrage activity between the east and the west was partly driven by rapid increases in Asian naphtha values, which have exceeded $1,000/tonne CFR Japan for the first time in history.

First-half June indication were pegged at $995.75-996.75/tonne CFR (cost and freight) Japan, second-half June at $994.50-995.50/tonne CFR Japan and first half July at $993.25-994.25/tonne CFR Japan.

The news that traders were again exporting European naphtha material to Asia and the sharp increase in Asian spot values brings relief to many European players, as the market had been stagnant for more than a fortnight, brokers said.

Sources have said that the European market was suffering from a lack of support in recent weeks due to limited demand from the petrochemical and gasoline sectors, which had set the market at a standstill.

The May crack spread, the spread between the value of crude relative to naphtha, was reported at -$8.85-8.55/bbl, steady from the previous week, but was still not keeping up with the large gains in crude oil values.

Outright naphtha values were assessed in the range $963-965/tonne CIF (cost, insurance and freight) NWE (northwest Europe). 

By: Kawai Wong
+44 20 8652 3214

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