19 November 2010 05:59 [Source: ICIS news]
By Felicia Loo
The prompt naphtha crack spread in the first half of January versus Intercontinental Exchange (ICE) Brent crude for January contract surged to $163.45/tonne (€119.32/tonne), the highest since 4 March when the crack spread stood at $164.03/tonne, ICIS data showed.
The spread, which is the price difference between the value of crude and the sale of the product, was assessed at $150.13/tonne in the week ended 12 November, according to ICIS.
“Crude was dumped the last few days, so a lot of people came to buy naphtha flat price,” said a trader referring to purchases made to cover positions.
Naphtha rose to a 26-month high at $801-804/tonne CFR (cost & freight) on Friday, supported by global crude futures nudging up to above $82/bbl following a recent slump from a 25-month peak of $88.54/bbl, ICIS data showed.
“The naphtha crack spread is too crazy,” said a trader.
Sentiment turned bullish after Chinese trader Unipec, the trading arm of Sinopec Corp, snapped up 150,000 tonnes of naphtha for delivery into China in the first half of December to plug a domestic shortfall.
“There is a severe diesel shortage in
The integrated crackers continued to operate at high rates and were fuelling the market, traders said.
The integrated margin, or the spread between ethylene and derivatives, rose to $312/tonne in the week ended 12 November from $235/tonne a week earlier, according to an ICIS margin report.
Meanwhile, the market braced for more demand from Asian heavyweight Formosa Petrochemical Corp, traders said.
It runs two other naphtha crackers at the same site.
The 1.2m tonne/year No 3 cracker was operating at 100% while production at the 700,000 tonne/year No 1 cracker was expected to be ramped up to full capacity in the coming weeks.
The spread between naphtha contracts in the first half of January and the first half of February widened to $7/tonne on Friday, from $4.50/tonne two weeks ago, reinforcing the bullish run.
Ethylene prices were quoted at $1,000-1,030/tonne
($1 = €0.73)
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