Asia naphtha backwardation widens $3/tonne

30 June 2008 10:01  [Source: ICIS news]

SINGAPORE (ICIS news)--Asian naphtha inter-month spreads continued widening by another $3/tonne to $13.50/tonne between the first half of August and first-half September as regional supplies remained tight, according to industry sources on Monday.

The spread was seen at $4.00/tonne in early June. Spreads between second-half August and second-half September also widened by another $2.50/tonne to $11.00/tonne from last week. The spread was seen at $3.00/tonne early June.

“This wide backwardation will most likely last till the end of the year,” a source said.

Asian naphtha markets had also been firming due to healthy buying interest from northeast Asia. South Korean and Taiwanese end-users were seen snapping up cargoes for first-half August delivery.

The recent purchase by Taiwan’s CPC for a 30,000 tonne cargo of full-range naphtha at a premium of $21-22/tonne to Japan quotes CFR (cost-and-freight) Taiwan for delivery in the second half of July, is a recent record high.

“This has further boosted market sentiments. Premiums have spiked to such high levels as well as naphtha prices,” a source noted.

Asian naphtha prices opened steady, with first-half August indications pegged at $1,228.50-1,231.50/tonne CFR (cost and freight) Japan, second-half August at $1,220.50-1,223.50/tonne CFR Japan and first-half September at $1,214-1,217/tonne CFR Japan.

Supplies had been tightening in Asia with fewer material coming from India and Europe and the market was expected to remain tight for the rest of the year.

Asian naphtha prices were up 13.68% versus gains of 11.22% in the Brent crude markets since early June.

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By: Desmond Chia
+65 6780 4359

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