Asia naphtha inter-month spreads in contango

12 May 2008 03:52  [Source: ICIS news]

SINGAPORE (ICIS news)--Asian naphtha inter-month spreads flipped into contango late Friday due to weak buying interest from northeast (NE) Asian end-users, industry sources said on Monday.

The spreads between second half of June and second half of July in the CFR (cost and freight) Japan naphtha market narrowed to parity early last Friday from $3/tonne early last week and subsequently flipped into contango of $1/tonne late Friday during the trading session.

The spreads are currently pegged at -$1.50/tonne to parity early Monday and the back month spreads were also similarly valued.

Demand from NE Asian end-users fell following the outage at three of Yeochun Naphtha Cracking Center's (YNCC) naphtha crackers.

High prices of naphtha also contributed to weak buying interest after breaking the $1,000/tonne record level.

Late Friday, Asian naphtha prices for the second half June prices closed at $1,002.50-1,003.50/tonne, first half July at $1,003-1,004/tonne and second half July at $1,003.50-1,004.50/tonne.

Restarted late on Tuesday evening, YNCC’s 850,000 tonne/year No 1 naphtha cracker was producing on-spec material middle of last week, however it had to be shut down again, following problems in its tower.

Both YNCC’s No 1 naphtha cracker and its 550,000 tonne/year No 2 cracker were expected to run at 60% running rates over last weekend. Its 400,000 tonne/year No 3 naphtha cracker was restarted at 60% operating rate over the weekend.

The plants had been down due to a power outage since 3 May.

YNCC had deferred an estimated 100,000 tonnes of naphtha slated for May-June delivery as well as a similar volume from June to July. YNCC had also done a timeswap with Honam Petrochemicals for some of its cargoes in June.

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By: Desmond Chia
+65 6780 4359

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