07 March 2013 12:59 [Source: ICIS news]
LONDON (ICIS)--The market for prompt European naphtha is likely to stay tight until at least the end of March, due to improved arbitrage opportunities, relatively healthy demand and refinery maintenance tightening supplies, sources said on Thursday.
“Nap [naphtha] is definitely fundamentally tight at the moment,” a trader said. “It’s tight right through March now.”
“Petchems are buying some too, Brazil is buying also,” the source added. “Support is there, the only issue is the NYH [New York Harbour] blending demand is quite poor at the moment.”
A producer said: “Gasoline [prices] is holding, so the gas-nap [price spread] is improving here. The US [demand for naphtha] looks better again, and with a wider e/w [east-west price spread] that arb [arbitrage] also looks more workable now.”
On Thursday morning, the east-west price spread stood at $15-16/tonne (€12-21/tonne) for April, rendering the arbitrage to Asia open.
However, one participant took a slightly different view. “I’m less optimistic,” a second trader said.
“You know I was in the bull camp recently. Asia is less aggressive now, the arb is still open, but less wide. Gasoline still pulling, but more selective on grades as we go in summer [driving] season.”
($1 = €0.77)
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