24 December 2009 06:28 [Source: ICIS news]
By James Dennis
SINGAPORE (ICIS news)--Asia naphtha prices are expected to remain strong into the new year with supplies tight and demand healthy from the regional petrochemicals sector, industry sources said on Thursday.
February physical cargoes were recently purchased by end-users at premiums well above $20/tonne (€14/tonne) CFR (cost and freight) northeast ?xml:namespace>
Premiums rose amid delays to arbitrage shipments of naphtha from the Mediterranean that should arrive in
Tight supply and strong end-demand in
Naphtha crack spreads between first-half February open-spec naphtha and February ICE Brent futures rose above $176/tonne, the highest level in 20 months, early this week.
At the start of December, open-spec naphtha prices hit a high of $751/tonne CFR Japan, the highest outright price in 14 months, helped by crude oil gains. Open-spec prices are currently well above $700/tonne CFR NE Asia.
Naphtha supplies in Asia have been reduced in part by cuts in refinery runs, principally in
The cuts were implemented due to poor refining economics particularly for distillates, they said.
Supplies from the
Demand from the Asian petrochemical sector remained strong with cracker operators running their facilities at high rates amid improved margins for downstream petrochemicals driven by strong demand from
Demand has been further raised by operators switching to increased volumes of naphtha feedstock due to higher costs of rival LPG feedstock.
The high cost of naphtha, however, makes the Asian petrochemicals sector worried about its negative impact on margins.
While there is a heavy turnaround schedule at regional crackers next year that could weigh down on the naphtha market, the expected start-ups of three new crackers should ease the impact on demand, market sources said.
At least 22 crackers would likely be shut for maintenance in 2010 compared with 15 facilities taken off line in 2009.
Shell Chemicals’ 800,000 tonne/year unit in
Meanwhile, eight Japanese crackers were scheduled to undergo maintenance turnarounds next year. Some six crackers in
($1 = €0.70)
Read John Richardson and Malini Hariharan's Asian Chemical Connections blog
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