11 June 2012 06:58 [Source: ICIS news]
By Ong Sheau Ling
Naphtha crack spreads have weakened, falling to $17.65/tonnee (€14.12/tonne) on 8 June, ICIS data showed, with one trader saying it is probably one of the lowest crack spreads on record.
Intermonth spreads are likewise falling, with the gap between the contracts for the second half of July and the second half of August at a $0.50/tonne contango on 8 June, compared with a $2.00/tonne backwardation a week earlier, ICIS data showed.
On Monday noon, however, prices of open-spec Asian naphtha contract for the second half of July were up by $36.00-37.00/tonne from Friday’s close at $783.00-786.00/tonne CFR (cost and freight), largely tracking gains in energy values.
There are expectations that import prices of polyethylene (PE) and polypropylene (PP) into
About 450,000 tonnes of arbitrage naphtha cargoes from Europe are also due to arriva in
“[Naphtha] prices have been decreasing. Sentiment is generally bad … just looking at the demand from the petrochemicals and the margins,” a Southeast Asian cracker operator said.
In the week ended 25 May, ethylene margins based on naphtha feed in northeast
Margins recovered to $140/tonne last week as naphtha prices plunged more than ethylene values, according to ICIS.
Ethylene prices in
Meanwhile, weak demand is also weighing down
Spot BD prices was at $1,850-1,900/tonne CFR (cost and freight) northeast (NE) Asia in the week ended 8 June, unchanged from the previous week, according to ICIS.
“With FPCC out of the picture, a significant amount of spot [naphtha] material will surface, compounding the oversupplied market,” a northeast Asian trader said.
UAE’s Abu Dhabi National Oil Co (Adnoc) has also issued tenders to sell a total of 125,000 tonnes of splitter and low-sulphur naphtha for early July loading, after failing to sell in full its term supply offers for July 2012 to June 2013.
However, some market players expect a reprieve from oversupply when Shell, a major supplier of naphtha, shuts its refinery next month.
Premiums fetched by both spot naphtha cargoes and tenders have weakened to negligible levels as most importers shy away from building up inventories, given uncertainty in global demand
“We may see discounts soon, if the market fundamentals continue to stay weak,” a northeast Asian cracker operator said.
India’s Oil and Natural Gas Corporation (ONGC) sold by tender last week 35,000 tonnes of naphtha for 16-17 June loading from Hazira at a premium of $22.00/tonne to Middle East quotes FOB (free on board), down from $51.00/tonne fetched in a previous tender for early June loading.
($1 = €0.80)
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