31 October 2011 07:25 [Source: ICIS news]
By Felicia Loo
Continued deceleration in
“The market is bearish currently. The market will be weak until the end of the year. The economic policy of
The open-spec Asian naphtha contract for the first half of December fell by $18.50/tonne (€13.14/tonne) from Friday’s close to $858.00-861.00/tonne CFR (cost and freight) on Monday midday, partly because of weaker global crude futures ahead of the G20 summit later this week, ICIS data showed.
The naphtha crack spread versus December Brent crude futures plunged to $30.38/tonne on 25 October, the weakest since 8 January 2009. The crack spread was assessed at $36.50/tonne on Friday versus $64.28/tonne on 21 October, the data showed.
The spread between the contracts for the first half of December and the first half of January weakened to a contango of $2/tonne on Friday, as compared a backwardation of $2/tonne in the week earlier.
Ethylene margins (naphtha feed) in northeast Asia tumbled by $82/tonne in the week ended 28 October, into negative territory for the first time since October 2009, as ethylene prices weakened by a further $20/tonne and co-product credits fell by 4.8%, according to ICIS.
“It’s a stark reminder of the late 2008 when downstream prices crashed,” said one trader in
Ethylene prices in Asia fell to $1,020-1,050/tonne CFR NE Asia in the week ended 28 October, from $1,040-1,070/tonne in the week closing 21 October, ICIS data showed.
Butadiene spot prices in
“Over the past several months, some crackers could still stick to high operating rates, partly because of healthy rubber prices. But it is getting tougher,” another naphtha trader said.
Amid such a difficult business environment,
Poor spot demand continues, with major spot buyer Formosa Petrochemical Corp (FPCC) on the sidelines because of lower operating rates at its three crackers in
Meanwhile, supply is rising in
Reflecting a bearish market, South Korea’s Honam Petrochemical has bought by tender 25,000 tonnes of naphtha for delivery into Yeosu in the second half of November at a discount of $1.50/tonne to Japan quotes CFR, down from a premium of $1.00-1.50/tonne fetched in the company's previous spot purchase of 50,000 tonnes for the same period of delivery.
Also, Indian refiner Oil and Natural Gas Corporation (ONGC) recently sold by tender 35,000 tonnes of naphtha to Mitsui at a weaker premium for loading from Hazira on 14-15 November. The cargo fetched a premium of $18/tonne to Middle East quotes FOB (free on board), down from a premium of $23/tonne fetched in a previous tender for late October to early November loading.
($1 = €0.71)
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