Asia naphtha spreads flip forward on weak demand

04 August 2008 18:22  [Source: ICIS news]

SINGAPORE (ICIS news)--Asian naphtha spreads between second-half September and second-half October have flipped into contango of $0.75/tonne on waning demand from northeast Asian end-users, industry sources said on Monday.

In the Asian CFR (cost and freight) Japan market, the backwardation spreads for the period had been narrowing rapidly from $1.25/tonne on 25 July to $0.25/tonne late last Friday.

Similarly, the backwardation spreads between first-half October and first-half November crunched $0.50/tonne to $0.50/tonne over the same period. The spreads, which are now at plus $0.25/tonne, were likely to flip into contango soon.

The Asian naphtha market had been under pressure as demand from northeast Asian end-users waned amid a spate of turnarounds from July to September, as well as sufficient term supplies.

Spot requirements remained sparse, with only one Korean end-user heard snapping up a cargo at discounted levels for second half of September delivery.

An influx of supplies from Europe and an increasing amount of exports from India added further downward pressure on the market.

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By: Desmond Chia
+65 6780 4359

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