Slim chance of European naphtha deep-sea inflows for Asia

29 August 2012 09:29  [Source: ICIS news]

SINGAPORE (ICIS)--The chances of Asia receiving fresh naphtha deep-sea supply from Europe for October arrivals are slim, as the east-west spread has almost halved from levels earlier this month, traders said on Wednesday.

The east-west spread, which measures the profitability of bringing European naphtha to Asia, lost 45% from early August to $8.75/tonne (€7/tonne), they said. On 3 August, the east-west spread stood at $15.87/tonne, traders said.

While the arbitrage window is closed on paper, some traders said that heavy naphtha supplies from northwest Europe could be moved to Asia where the premiums remain attractive.

“You could still get heavy full-range grades. The premiums are better this side,” said a trader, referring to premiums at $5-10/tonne in Asia.

The premiums of heavy naphtha are underpinned by the firm fundamentals in the downstream benzene and para-xylene (PX) segments, traders said.

Demand for PX remains firm, with prices pegged at $1,460-1,465/tonne FOB (free on board) Korea compared with $1,400-1,405/tonne FOB Korea four weeks ago, according to ICIS data.

Tight prompt supply of benzene in the northeast Asian region helped support prices at $1,170-1,180/tonne FOB Korea, despite slides in crude futures, ICIS data showed.

Tight supply and firm spot buying pushed up Asian naphtha prices by 12% from early August to $972.50-974.50/tonne CFR (cost and freight) Japan on Tuesday, ICIS data showed.

$1 = €0.80

By: Felicia Loo

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