06 July 2012 11:16 [Source: ICIS news]
By Ong Sheau Ling
The open-spec Asian naphtha contract for the second half of August rose to a five-week high of $825.00-827.00/tonne (€668-670/tonne) CFR (cost and freight) Japan on Friday, rising by $75.00/tonne from the previous week, according to ICIS.
The naphtha crack spread versus August Brent crude futures was also at a five-week high of $76.53/tonne, up 43% from the previous week, ICIS data showed.
“Naphtha [prices] are moving up much faster than its derivatives. This is not a good sign,” a Singapore-based trader said.
Asian naphtha prices have gained 18.4% or $128.50/tonne in two weeks’ time from a 21-month low on 22 June, according to ICIS.
“This uptrend is not sustainable since there is no improvement in physical demand heading downstream,” a South Korean cracker operator said.
There are concerns that petrochemical margins will deteriorate once again if naphtha prices continued to rise at a more brisk pace compared with those of downstream products.
On Friday, spot ethylene were quoted at $1,040-1,060/tonne CFR NE (northeast) Asia, compared with $1,000-1,050/tonne CFR NE Asia last week. Butadiene, on the other hand, was at above $2,300/tonne
“There is still a little stocking-up in inventories in the [petrochemical] sector,” a trader based in
Demand is expected to wane as working hours in the predominantly Muslim countries in
“[Naphtha] prices have been going up steadily, partly because of the buying activity going on with the South Korean and Southeast Asian cracker operators,” another trader based in
The cargoes fetched premiums of $22.50-28.00/tonne to
Kuwait Petroleum Corp (KPC) sold 75,000 tonnes of full-range naphtha (FRN) on 5 July at a premium of around $20.00/tonne to
On 2 July, Honam bought a total of four 25,000-tonne cargoes for first-half August delivery. Three lots, heading to Yeosu, was purchased at a premium of $2.00/tonne to Japan quotes CFR, while the fourth parcel, bound for Daesan, was bought at a premium of $1.00-1.50/tonne to Japan quotes CFR.
Fewer supplies from Europe in August because of lower run rates are refineries have kept supply in
“Some crackers are ramping up. This will increase the physical demand for naphtha,” he said.
But once European refineries ramp up production, and with the current influx of Middle East spot material, a supply overhang may again plague the Asian market, another Singapore-based trader said.
Qatar International Petroleum Marketing Co (Tasweeq) offered by tender late on 5 July 50,000 tonnes of full-range naphtha and 50,000 tonnes of plant condensate for second half of August delivery, which was a leftover from its unsold one-year term supplies that was offered in May.
“The key focus here is the demand. Unless demand improves, prices cannot be supported,” another South Korean cracker operator said.
“With FPCC still out of the picture, it is hard to see the firm uptrend,” another Southeast Asian cracker operator said.
($1 = €0.81)
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