Corrected: Asia’s naphtha crack spread at near three-year low on margins slump

14 November 2011 10:20  [Source: ICIS news]

Correction: In the ICIS news story headlined "Asia’s naphtha crack spread at near two-year low on margins slump" dated 14 November 2011, please read in the headline and first paragraph ... three-year low ... instead of ... two-year low .... A corrected story follows.

SINGAPORE (ICIS)--Asia’s naphtha crack spread has declined to nearly a three-year low on Monday because of shrinking petrochemical demand and a slump in margins.

The crack spread between second-half December open spec naphtha and December Brent crude futures shrank to $28.70/tonne (€20.66/tonne) - the lowest since 8 January 2009, when it stood at $8.40/tonne - from $36.75/tonne last Friday, according to ICIS data.

“It is a bearish market,” said one trader, adding that the sinking margins would prompt further cracker run cuts in Asia.

Ethylene margins, based on naphtha feedstock, in northeast Asia continued their downward trend, closing at minus $185/tonne in the week ending 11 November, according to ICIS. The margins fell by $26/tonne from a week earlier.

A $10/tonne rise in ethylene prices and a 0.5% increase in co-product credits were unable to offset a 1.5% rise in feedstock costs, after naphtha prices rose by $14/tonne on the back of firm global crude values, ICIS data showed.

On Monday, the second-half December naphtha contract fell by $7/tonne to $886.00-888.00/tonne CFR (cost and freight) Japan, according to ICIS.

($1 = €0.72)

For more on naphtha, visit ICIS chemical intelligence

By: Felicia Loo

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