Asia’s naphtha crack spread tops $87/tonne; snaps losing streak

09 August 2012 08:13  [Source: ICIS news]

SINGAPORE (ICIS)--Asia’s naphtha crack spread has rebounded and topped $87/tonne (€70/tonne), stemming three consecutive trading sessions of declines, with most arbitrage material able to be absorbed into the regional market, traders said on Thursday.

The naphtha crack spread for second-half September widened to $87.48/tonne against Brent crude futures on Wednesday’s close, according to ICIS data.

The Singapore oil market is closed on Thursday for a public holiday.

The crack spread was assessed at $86.65/tonne on Tuesday, compared with $96.13/tonne on 1 August, ICIS data showed.

Meanwhile, open-spec naphtha prices closed at $922.50-924.50/tonne CFR Japan on Wednesday, up $9/tonne from Tuesday, the data showed.

Around 500,000-700,000 tonnes of naphtha from northwest Europe and the Mediterranean would arrive in Asia in August and September, with the bulk being heavy full-range naphtha which is currently in firm demand.

“A lot of the cargoes have already being absorbed in the market,” said a trader in northeast Asia.

Many crackers in northeast Asia continue to operate at high rates, with most South Korean crackers running at 100%, traders said.

In a sign of firm demand, Taiwan’s CPC Corp resumed spot buying of full-range naphtha for the first time since April.

The company bought by tender 30,000 tonnes of full-range naphtha for first-half September delivery to Kaohsiung at a premium of $1-3/tonne (€0.81-2.43/tonne) to Japan quotes CFR (cost & freight).

CPC is currently operating its 385,000 tonne/year No 4 naphtha cracker in Linyuan and its 500,000 tonne/year No 5 naphtha cracker in Kaohsiung at 90-100% of capacity. CPC Corp's No 4 cracker restarted on 13 July following an unplanned shutdown in early July.

By: Felicia Loo

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