Asia naphtha slumps to five-year lows

04 November 2008 11:49  [Source: ICIS news]

SINGAPORE (ICIS news)--Asian naphtha prices tumbled more than $48/tonne on Tuesday to five-year lows amid reports of a trade, while crack spreads against ICE Brent fell to a discount of around $192/tonne.

In open market trading on Tuesday, Shell sold one 25,000 tonne cargo of first half January open spec naphtha to Cargill at $267/tonne, cost and freight (CFR) Japan, $49-50/tonne lower than the previous day’s assessment.

Following the deal, the spread between the second half December and the first half January naphtha contracts narrowed by $1/tonne to $15/tonne.

Second half December open spec naphtha was assessed at $251.50-252.50/tonne CFR Japan, down $48-49/tonne on the previous day.

The naphtha crack spread between second half December open spec naphtha and December ICE Brent futures dropped still deeper into discount on Tuesday, falling to around minus $192/tonne.

“There remains a large number of sellers in the market with few buyers. Cargill was brave to make such a purchase”, said a trader.

Naphtha demand in Asia has been hard hit by the slowdown in the petrochemical markets. End users already have high naphtha inventory levels.

Cracker operators have cut runs amid weakening downstream demand.

Attempts by sellers to move naphtha from Asia to Europe have been thwarted to some extent by the deterioration in European naphtha markets.

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By: James Dennis
+65 6780 4359

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