12 April 2013 05:15 [Source: ICIS news]
(adds details, quotes)
By Felicia Loo
SINGAPORE (ICIS)--Around 1.0-1.1m tonnes of deep-sea naphtha supply will land in Asia in May, similar to the levels in April, and the influx will be taking place during a time when petrochemical demand is on a decline, traders said on Friday.
The volumes included an unusually huge US abitrage naphtha supply of 300,000 tonnes, they said.
It might be difficult to seek out buyers for the arbitrage material, which is mainly heavy naphtha that hails from northwest Europe, the Mediterranean, Russia and the US, traders said.
“I don’t think the market can absorb the huge volumes,” said one trader. “So there may be a possibility for some people to bear demurrage until June.”
At midday, open-spec second-half May contract fell to $862.50-865.50/tonne (€655.50-658.78./tonne) CFR (cost & freight) Japan, down by $7.50-8.50/tonne from Thursday, also partly because of overnight losses in global crude oil futures.
At the close of trade on Thursday, the naphtha crack spread against May Brent crude futures tumbled to $81.43/tonne in response to the persistently high arbitrage volumes, according to ICIS data.
The crack spread hit the lowest since 14 August 2012 when the crack spread stood at $78.25/tonne, the data showed.
The naphtha backwardation was further squeezed to $11.00/tonne on Thursday from $16.00/tonne in backwardation on Wednesday, ICIS data showed. The backwardation is at its weakest since 29 November 2012.
Meanwhile, northeast Asia’s ethylene import prices were at $1,260-1,280/tonne CFR NE Asia at the close of trade on 11 April, down by $20/tonne at the high end of the range, according to ICIS data.
The downstream petrochemical sector was hit by recent operating rate cuts for crackers in the region and poor margins in the derivatives market, market participants said.
($1 = €0.76)
Additional reporting by Helen Lee
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