FocusAsia naphtha to stay soft on weak demand, excess supply

15 May 2012 05:18  [Source: ICIS news]

By Quintella Koh

Canton FairSINGAPORE (ICIS)--Naphtha prices in Asia are expected to remain soft for the rest of May on sluggish downstream demand amid an increase in regional spot supplies, market participants said on Tuesday.

Naphtha was assessed at $927.50-930.50/tonne (€723.45-725.79/tonne) CFR (cost and freight) Japan on Tuesday morning, up a marginal $0.50-2.50/tonne from Monday’s close, according to ICIS.

Several traders and cracker operators have pointed to dismal consumer data as a harbinger of a weak global economic situation for the rest of 2012, dampening sentiment in the regional naphtha market.

At the recently concluded China Import and Export Fair, also known as Canton Fair, in Guangdong, volume of transactions declined to $36bn, down by 4.8% from the previous year, according to organisers.

Cantor Fair is China’s largest trade fair for overseas buyers that features machinery, electronics, chemical products, consumer goods, gifts, household items, textiles, garments, shoes, office supplies, medical supplies and food items.

Orders placed at the fair provide a clear indication of the global consumer sentiment, which affects the naphtha and petrochemical markets.

“There is no impetus for naphtha prices to increase given the current cautious sentiment. Buyers are holding full inventories and maximising on cracking liquefied petroleum gas. There is no bottom for naphtha,” said a trader.

Asian naphtha prices have declined by more than 9% since the last week of April, when prices were at $1,025-1,026/tonne CFR Japan, according to ICIS.

Increased supply coming from India and northeast Asia is also exacerbating the bearish sentiment among traders and cracker operators, with premiums on naphtha transactions falling this week, market sources said.

South Korea’s S-Oil had received significantly lower bids for its term naphtha lifting for the period July to December this year, a company source said.

It received bids from southeast Asian traders at zero to $1.00/tonne premium to CFR (cost and freight) Japan quotes. This is in sharp contrast to S-Oil’s naphtha term contracts last year, which garnered a premium of plus $9.00/tonne to CFR Japan quotes, the source said. S-Oil’s negotiations are expected to be concluded on 18 May.

Last week, India’s Bharat Petroleum Corp Ltd (BPCL) sold a 35,000 tonne cargo for loading from Mumbai on 3-5 June at plus $37/tonne to FOB Middle East quotes, to Switzerland-based Glencore. The state-owned company sold a second 35,000 tonne cargo to be loaded from Kochi on 8-11 June at the same premium to France’s Total Oil Trading SA (TOTSA).

BPCL last sold a 35,000 tonnes parcel for loading from Mumbai on 23-25 May to Japan’s Marubeni at plus $45/tonne to FOB Middle East quotes.

naphtha price graph

($1 = €0.78)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections


By: Quintella Koh
+65 6780 4372



AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly

ICIS news FREE TRIAL
Get access to breaking chemical news as it happens.
ICIS Global Petrochemical Index (IPEX)
ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index