18 January 2011 03:41 [Source: ICIS news]
By Felicia Loo
Asia’s naphtha crack spread versus Brent crude futures plunged to a three-month low of $126.60/tonne late last week before rebounding to $154.93/bbl on Monday’s close, after Taiwan’s Formosa Petrochemical Corp (FPCC) snapped up 150,000 tonnes of spot naphtha for second-half February delivery, up from its previous purchase of 75,000-100,000 tonnes for first half of February.
But the premium, albeit undisclosed, was lower than
And the crack spread was significantly weaker compared with $189.85/tonne achieved earlier this year, and the naphtha’s spread between first-half March and first-half April contracts waned to $5/tonne in backwardation from plus $7.50/tonne in the same period, ICIS data showed.
Because of poor gasoline economics, refiners in Europe were compelled to move bigger-than-expected naphtha volumes to
Petrochemical producers had tapped on cheaper feedstock liquefied petroleum gas (LPG) instead of naphtha, prompting shipments eastwards.
As much as 500,000 tonnes of Western arbitrage shipments would land in Asia in February, deepening the flood of supply in
Reflecting hefty stockpiles, onshore inventories of light distillates in
Meanwhile, a string of naphtha tenders garnered lower premiums and that shed light on a weakening market, traders said.
“Premiums were getting modest,” said another trader.
Prices were off from previous export tenders from the Middle East, which were sealed at premiums of above $20/tonne to
The market was further dampened following a brief cracker snag faced by
YNCC would curtail its spot naphtha purchases for the duration, in tandem with the lower run rates. The company would buy just five to six spot naphtha cargoes each month, down from the usual eight cargoes a month. Each cargo is 25,000 tonnes.
“The market is heading for a downturn ahead of peak cracker maintenance in the second quarter,” a trader said.
($1 = €0.75)
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