Asia open-spec naphtha falls to six-week low of $699/tonne

27 January 2010 11:05  [Source: ICIS news]

SINGAPORE (ICIS news)--Asia’s open-spec naphtha prices have fallen below $700/tonne (€497/tonne), a six-week low, as market players worry that the current robust petrochemical sector could buckle under pressure from continuous weakness in global crude oil futures, traders said on Wednesday.

An open-spec cargo changed hands between Cargill and Itochu at $693/tonne CFR (cost and freight) Japan for delivery in the second half of March, and the first-half March contract was assessed at $698-700/tonne CFR Japan, traders said.

This was the weakest outright level since 18 December 2009.

US crude futures hovered below $75/bbl as the US dollar firmed.

“The sentiment changes fast. It’s getting bearish and cracker maintenance seems the biggest factor,” said a South Korea-based trader.

Other sources said Europe might revive naphtha arbitrage shipments in March, when the end of winter will see crackers switch to liquefied petroleum gas (LPG). But at this stage, sources said, no fixtures were seen.

“LPG prices should soften after the winter is over, and LPG could be back in the cracking pool in Europe,” said a trader in Singapore.

Furthermore, traders said, China’s move to tighten monetary policy might limit the use of plastics, as Beijing strived to rein in the country’s economic expansion, traders said.

“China’s move is another concern. The market is digesting the possible effects [from the tightening of monetary policy],” said the trader.

Benchmark naphtha crack spreads fell to the weakest level since 4 January at $150.08/tonne, according to data from global chemical market intelligence service ICIS pricing.

“The market is quiet for now, as people are cautious. Generally, the outlook for March is not as strong as February,” said a naphtha trader.

Asian ethylene spot prices were range-bound, with strong resistance to selling targets at $1,400/tonne CFR NE (northeast) Asia and above, amid prevailing weakness in the key high density polyethylene (HDPE) market, and no offers or bids were reported, according to ICIS pricing.

($1 = €0.71)

For more on ethylene and other chemicals, visit ICIS chemical intelligence
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By: Felicia Loo

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