Europe naphtha trades up 3% from end-May on Asia hikes, crude

05 June 2013 15:47  [Source: ICIS news]

LONDON (ICIS)--European naphtha prices rose by 3% from the end of May on the prospect of higher-priced deals in the key Asian export market and a rise in upstream crude oil prices, traders said on Wednesday.

Naphtha prices rose by 3% from $827-831/tonne CIF (cost, insurance & freight) NWE (northwest Europe) on 31 May to $850-853/tonne on Wednesday morning, despite slow seasonal demand and healthy supply.

In the open market platform, naphtha traded at a five-session high of $850-852/tonne CIF NWE on Tuesday, up from $841-845/tonne on Monday.

Trading firm Glencore, which were in the market chiefly as a buyer last week, sold two out of the seven open-traded cargoes this week.

Meanwhile, Swiss trader Vitol bought the majority of the naphtha cargoes. A trader said on Wednesday that it attributed the higher naphtha prices to the increased demand from the buyer.

Meanwhile, naphtha prices were given a boost on Tuesday by an unexpected hike in Asian naphtha values on the same day. Asian markets are a major export destination for Europe's naphtha.

On 4 June, open-spec naphtha prices for second-half July increased by $26/tonne to $875-877/tonne CFR (cost & freight) Japan from the previous day.

"The stronger numbers in the east this morning is the only explanation," a second naphtha trader said on Tuesday's firmer open trading.

However, the arbitrage to Asia from northwest Europe is only marginally open, with the July price spread between the regions at just $19.50/tonne, the trader added.

"The basic story is the arb [arbitrage] works from the Med [Mediterranean], not so much from the North," it said.

Meanwhile, a rise in July ICE Brent crude oil futures to above $103/bbl on Tuesday was being sustained at least until 15.30 GMT on Wednesday, helping support naphtha prices.

Naphtha is used extensively as a gasoline blending component and in the petrochemical production of olefins.

($1 = €0.76)

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By: Cuckoo James
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