13 August 2010 05:03 [Source: ICIS news]
By Felicia Loo
The spread between second-half September and second-half October contracts was assessed at a contango of $2.00/tonne (€1.6/tonne) on Friday mid-day, compared with a contango of $2.50/tonne last week, ICIS data showed.
The spread between first-half October and first-half November contracts was valued at 50 cents/tonne in backwardation.
The weaker the contango, the firmer the front-month price and this could point to a market in a rebound, traders said.
On signs of an improving market, the naphtha crack spread versus Brent crude futures scaled up to a near two-month high of $101.63/tonne in mid-week, and then receded to $92.03/tonne on Thursday’s close due to an overall decline in the crude oil complex, ICIS data showed. Nonetheless, the crack spread was much stronger versus $57.20/tonne a month ago.
“Currently, the sentiment has firmed up because of
For instance in the physical market, Glencore sold a cargo to Cargill at $694/tonne for second-half September delivery on Wednesday, and BP sold a lot to Shell for first-half October delivery at $670.50/tonne on Thursday.
Formosa bought via tender 150,000 tonnes of naphtha, for delivery in the second half of September, at a slimmer discount of $2-3/tonne to Japan quotes CFR (cost and freight), less than a week after it bought 30,000-50,000 tonnes of naphtha for first-half September delivery at a discount of $5-7/tonne to Japan quotes CFR.
The Asian market was earlier hit after major buyer,
Given that one of its three crude units has remained shut,
One of the CDUs restarted on 29 July, while a second unit came back on line on 3 August. The third CDU was still shut and was not expected to come back on stream until October, at the earliest, due to maintenance work.
As spot naphtha demand started to pick up, the surplus from
“There are more naphtha exports from the
The crackers in this region continued to operate at full tilt, buoyed by the fairly attractive petrochemical markets, traders said.
“The propylene market is okay. The (integrated) crackers are not cutting runs at this juncture,” said a trader in
Downstream, prices for ethylene and propylene nudged higher compared with four weeks ago, ICIS data showed.
Propylene, which is the highly profitable by-product of cracking naphtha, was priced at $1,170-1,200/tonne CFR NE Asia, up from $1,060-1,080/tonne CFR NE Asia four weeks ago.
Ethylene, the basic petrochemical building block, climbed higher to $900-910/tonne CFR NE Asia from $860-870/tonne CFR NE Asia over the same period.
($1 = €0.78)
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