Asia naphtha backwardation narrows to $10.50/tonne on weak margins

27 November 2012 09:29  [Source: ICIS news]

SINGAPORE (ICIS)--Asia’s naphtha intermonth spread has fallen to a three-month low on Tuesday, on the back of weak margins, traders said.

The spread between the first half of January and the first half of February contracts narrowed to $10.50/tonne (€8.09/tonne) in backwardation from a backwardation of $12.00/tonne on Monday, according to ICIS data.

The spread is at its weakest since 28 August when the backwardation was at $10.00/tonne, the data showed.

“The petrochemical margins are weak,” said a trader in Singapore.

Northeast Asian ethylene margins (naphtha feed) sank to $30/tonne in the week ended 23 November from $82/tonne in the previous week, because of a $65/tonne drop in ethylene prices and a 0.2% fall in co-product credits, according to ICIS weekly margin ethylene report.

The fall in margins was cushioned slightly by a 0.6% decline in naphtha costs. Co-product credits fell mainly on lower values for butadiene and propylene, the report stated.

Meanwhile, rising deep-sea inflows and high Indian exports continue to dominate the Asian naphtha market.

“However, the end-users’ demand is slightly lower as they want to keep low inventories at the end of the year,” another trader said.

Open-spec first-half January contract was at $947.50-949.50/tonne CFR (cost & freight) Japan on Tuesday, up by $6.50/tonne from Monday because of higher global crude futures, ICIS data further showed.

($1 = €0.77)

By: Felicia Loo

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