16 August 2012 07:33 [Source: ICIS news]
By Felicia Loo
European cracker operators have the incentive to switch to naphtha because of a weakening price spread between propane and naphtha, they said.
With the North Sea refineries going into maintenance,
“The arbitrage window is closed,” said one trader.
Prices will also draw support from the increased use of naphtha in the gasoline blending pool to plug a supply shortfall in the
At midday, Asia’s open-spec naphtha prices for the first-half October contract rose by $15-17/tonne (€12-14/tonne) from Wednesday to $963-$966/tonne CFR Japan – the highest since 4 May when prices were $965.50/tonne CFR Japan, according to ICIS data. Prices have tracked the overall robust gains in Brent crude futures.
Brent crude on ICE Futures rallied on Wednesday after weekly
However, Asian petrochemical demand appeared to be weak, capping any significant price gains in naphtha, traders said.
Asian styrene monomer (SM) prices remain on a downtrend this week with market activity slowing down. Prices declined to around $1,430/tonne CFR China this week after surging past $1,460/tonne CFR China last week.
According to ICIS data, SM spot prices staged a dramatic rebound off a low this year of $1,240/tonne CFR China in the first half of June, with the eurozone crisis abating temporarily. Short covering activities in July gave prices another boost from $1,325/tonne CFR China in late June to $1,400/tonne CFR China in late July.
However, with most of the shorts being covered over the past few weeks, buying impetus has weakened with players staying on the sidelines. Weak performance in the downstream styrenic resins sector also exerted downward pressure on SM prices. Poor economic conditions in the
The continuous absence of key buyer –
FPCC took its 1.03m tonne/year No 2 cracker in Mailiao off line on Wednesday morning as planned. The 30-day shutdown prompted FPCC to skip spot naphtha buying for September and October deliveries.
The naphtha backwardation narrowed by half to $4/tonne on Wednesday, compared with a backwardation of $8/tonne on Monday, ICIS data showed.
“The naphtha intermonth spread is not as strong,” one trader said.
($1 = €0.81)
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