12 November 2012 07:29 [Source: ICIS news]
By Felicia Loo and Chow Bee Lin
Asia’s open-spec naphtha prices rose by $14-15/tonne (€11-12/tonne) to $951-954/tonne CFR (cost & freight)
Integrated northeast Asian PE margins rebounded in the week ended 9 November, with low density polyethylene (LDPE) margins rising by $86/tonne to $64/tonne and high density polyethylene (HDPE) margins by $65/tonne to $80/tonne, because of lower feedstock costs and firmer polymer prices, according to ICIS weekly margin report.
Naphtha prices weakened by $19/tonne to $937-939/tonne CFR Japan in the week ended 9 November, reducing feedstock costs by 2.0%, the report showed.
A week-on-week drop in Brent futures at the close of Asian trading on 9 November had undermined
“With the coming Lunar New Year, demand and prices may be propped up,” said a trader.
The Lunar New Year holiday will take place on 9-15 February 2013 in
PE buyers’ inventory was low as many traders and end-users have been maintaining low inventories this year because of the uncertain global economic outlook, market participants said.
News emerged in the previous week that
Some traders expect
Chinese plastic demand may increase given positive economic data, market participants said.
In September, annual exports growth was at 9.9% – rising from 2.7% in August.
Meanwhile, the naphtha market continues to stay in a steep backwardation, signalling a strong market buoyed by tight prompt supply, traders said.
The intermonth spread between the naphtha contracts for second-half December and second-half January widened to a steep backwardation of $19/tonne on 9 November, compared with a backwardation of $18/tonne in the previous week, according to ICIS data.
The backwardation is at its widest level since 15 May 2012 when the backwardation soared to $28/tonne, the data indicated.
The intermonth spread between the naphtha contracts for first-half January and first-half February was assessed at a backwardation of $17/tonne on 9 November, compared with a backwardation of $15/tonne in the previous week, ICIS data showed.
Some traders said the tight supply situation may ease in the coming weeks because of inflows of deep-sea material from Europe and the
Others argued that robust demand from South Korean and Taiwanese crackers can easily soak up the barrels.
The premiums awarded in the spate of tenders last week fetched high levels in reflection of a strong market, traders said.
In a bid to sell its cargoes at high premiums,
In its last tender, Essar Oil sold a 35,000 tonne naphtha cargo to Mitsubishi Corp at a sky-high premium of $49/tonne to Middle East quotes FOB (free on board) for loading from Vadinar between 30 November and 4 December.
Essar Oil previously sold by tender 35,000 tonnes of naphtha to Vitol at a premium of $35-36/tonne to
($1 = €0.79)Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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