Asia naphtha backwardation hits 27-week high, tops $10/tonne

29 August 2012 12:07  [Source: ICIS news]

SINGAPORE (ICIS)--Asia’s naphtha backwardation has widened to a 27-week high on Wednesday, helped by tight supply and firm demand from South Korean cracker operators, traders said.

The intermonth spread between the first half of October and November open-spec naphtha contracts widened by 50 cents/tonne from Tuesday to a backwardation of $10.50/tonne (€8.40/tonne) at the close of trade on Wednesday, the strongest since 20 July, ICIS data showed.

The backwardation stood at $3/tonne on 21 August but has since gained strength on the back of firm fundamentals, traders said.

In physical trading, Glencore sold a second-half October open-spec cargo to Shell at $957/tonne, as well as the first-half October/second-half October spread to Vitol at $5.50/tonne, traders said.

Asian naphtha prices closed at $961.50-963.50/tonne CFR (cost and freight) Japan on Wednesday, down by $11/tonne from Tuesday because of slides in crude futures.

($1 = €0.80)

By: Felicia Loo

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