Asia naphtha surges on bullish China LLDPE futures market

03 December 2012 10:00  [Source: ICIS news]

SINGAPORE (ICIS)--Asia’s open-spec naphtha prices rose sharply on Monday, fuelled by stronger settlement at China’s linear low density polyethylene (LLDPE) futures market in response to an outage at Daqing Petrochemical’s facilities, traders said on Monday.

The second-half January naphtha contract closed at $963-965/tonne (€742-743/tonne) CFR (cost & freight) Japan – the highest since 7 November, when prices settled at $968.50-970.50/tonne CFR Japan – according to ICIS data.

The naphtha crack spread widened to $129.63/tonne against Brent crude futures, from $124.25/tonne on 30 November, the data showed.

The crack spread was at its strongest since 22 November, while the intermonth naphtha backwardation between the second-half January and the second-half February contracts widened to $12/tonne – the strongest since 21 November, the data further indicated – up by $1/tonne from last Friday.

Market players were upbeat that the surge in downstream petrochemical prices would boost the values of feedstock naphtha.

China’s linear low density polyethylene (LLDPE) futures closed 3.45% higher on Monday, in reaction to the unexpected shutdown of two polymer facilities on 30 November.

May LLDPE futures, the most actively traded contract on the Dalian Commodity Exchange (DCE), closed at yuan (CNY) 10,350/tonne ($1,661/tonne), up by CNY345/tonne from the settlement price of CNY10,005/tonne last Friday.

Daqing Petrochemical had to partially shut its new 600,000 tonne/year cracker in Heilongjiang province, following a fire at the site on 30 November. It also took its two high density polyethylene (HDPE)/LLDPE plants - with a combined capacity of 550,000 tonnes/year - off line last Friday.

($1 = €0.77 / $1 = CNY6.23)

By: Felicia Loo

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