25 October 2012 06:10 [Source: ICIS news]
By Felicia Loo
SINGAPORE (ICIS)--Asia’s naphtha crack spread will be supported by tight availability of cargoes from the Middle East and ?xml:namespace>
The strong supply/demand fundamentals of the petrochemical feedstock allow the market to shrug off weakness in downstream plastics sector for the time being, they said.
At the close of trade on 24 October, the Asian naphtha crack spread widened to $131.05/tonne (€100.91/tonne) against December Brent crude futures – the strongest for the third successive trading session, ICIS data showed.
On Thursday morning, open-spec naphtha prices for the first half of December contract stood at $940.00-943.00/tonne CFR (cost and freight) Japan, while the intermonth spread between the first-half December and the first-half January contracts was at a steep backwardation of $15.00/tonne on Wednesday’s close, according to ICIS data.
“The low [naphtha] inventory is making end-users nervous,” said a buyer in northeast
October-loading naphtha shipments bound for Asia from the
Besides, limited deep-sea supply from northwest Europe and the
The weak East-West spread of $2.00/tonne suggested that the arbitrage window remains firmly shut, they said.
It will not be a cinch to find prompt cargo supply, leading to near record-high premiums being paid in spot tenders and trades throughout the week, they said.
In its previous spot purchase, Honam bought 75,000 tonnes of naphtha at a premium of around $16.00/tonne to Japan CFR quotes for delivery to Yeosu and Daesan in the second half of November.
Another South Korean chemical company LG Chem bought 25,000 tonnes of spot naphtha at a premium of $17.50/tonne to
In its previous spot purchase, LG bought 50,000 tonnes of naphtha at a premium of $14.50/tonne to
Indian Oil Corp (IOC) sold by tender 35,000-40,000 tonnes of naphtha for loading from Dahej on 16-18 November, at a premium of $42.00/tonne to IOC pricing formula on a free on board (FOB) basis.
IOC previously sold by tender 35,000 tonnes of naphtha for loading from Dahej at a premium of $30.00/tonne to IOC pricing formula on a FOB basis for loading on 25-27 October.
The deal for the cargo for loading on 15-17 November was awarded to STO Maldives at a premium of $38.00-39.00/tonne to
In its last tender, BPCL sold 30,000 tonnes of naphtha to Chinese trader Unipec at a premium of $26/tonne to
Two weeks ago, FPCC bought at least 30,000 tonnes of spot naphtha at a premium of below $10/tonne to
Higher run rates at FPCC’s three crackers with a combined ethylene capacity of 2.93m tonnes/year will be implemented in line with the restart of a downstream monoethylene glycol (MEG) plant in Mailiao.
Even as Indian refiners are boosting November naphtha exports to 800,000 tonnes from 720,000 tonnes in October,
“Now, Asia is attracting barrels from the
The tight cargo availabilities provide strong support to naphtha prices in spite of plans by downstream South Korean polypropylene (PP) producers to cut output in November if their margins get squeezed further.
Integrated PP margins in northeast
Prices of the benchmark PP flat yarn fell by $20-30/tonne week on week to $1,390-1,430/tonne CFR China on 19 October, ICIS data showed.
Asian ethylene prices, on the other hand, stood at $1,350-1,370/tonne
“The naphtha market is still very strong. Supply is very tight,” said a trader.
($1 = €0.77)
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