23 March 2011 13:47 [Source: ICIS news]
LONDON (ICIS)--The European naphtha market remains tight as falling demand from Japan following the earthquake is outweighed by strong demand from the US and Brazil, sources said on Wednesday.
The market had been slightly oversupplied when the Japan earthquake struck on March 11 and there were fears it would lengthen further in the wake of the disaster.
“The market is tight right now”, a trader said. “Lots of cargoes have left northwest Europe and the Mediterranean, mainly heading to the US.”
The forthcoming US driving season has recently increased demand for naphtha to be used in gasoline-blending. A second source said that material was also heading to Brazil for use in the gasoline sector.
In addition to this healthy demand, a curtailed supply has also added to tightness in the market.
“There are also some refinery run cuts, so even with a reduced arb [arbitrage] to Asia, the European market remains tight”, the trader continued.
Despite Japan’s reduced consumption, some material was heading there regardless, market sources said. A 75,000 tonne cargo was has left Norway for Japan and a second cargo was said to be on its way there from Morocco.
However, another source had heard that with its own requirements for naphtha falling, Japan was exporting its unwanted naphtha to other Asian countries such as Taiwan, Korea and China.
An analyst said it was still too soon to gauge the full impact of the Japanese disaster on European demand. "Japanese demand for naphtha might increase at some point, but we don’t know how long it will take Japan to recover.”
At 11.00 GMT naphtha was trading at $979-987/tonne CIF (cost, insurance and freight) NWE (northwest Europe).Click here for latest news on the ?xml:namespace>
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