Asia naphtha backwardation, crack spreads widen on tight supply

31 October 2012 03:08  [Source: ICIS news]

SINGAPORE (ICIS)--Asia’s intermonth naphtha spread and crack spreads strengthened on the back of tighter supply and strong demand, traders said on Wednesday.

The spread between the first half of December contract and the first half of January contracts widened to $18/tonne (€14/tonne) in backwardation on Tuesday from $17/tonne on Monday, according to ICIS data.

The spread is at its strongest levels since 15 May when the intermonth spread soared to $28/tonne, the data showed.

The spread between the second half of December contract and the second half of March contract was at $40/tonne at the close of trade on 30 October, traders said.

The wider the backwardation, the stronger the front-month market is.

On Tuesday, the naphtha crack spread closed at $143.10/tonne – the highest since 12 September, according to ICIS data.

“There is strong demand from South Korea and Taiwan, while there is less [supply] availability from the Middle East,” said a trader.

On Wednesday morning, open-spec naphtha prices for the first half of December contract dropped by $4-6/tonne from Tuesday at $958-961/tonne CFR (cost & freight) Japan in tandem with Brent crude futures, ICIS data showed.

($1 = €0.77)


By: Felicia Loo



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