UpdateAsia naphtha intermonth spread weakens to nearly year-low

10 June 2013 11:23  [Source: ICIS news]

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SINGAPORE (ICIS)--Asia’s naphtha inter-month spread has narrowed on Monday to the lowest levels in nearly a year because of ample supply and dwindling demand of the petrochemical feedstock, traders said.

The second-half July and second-half August spread weakened to $5.00/tonne (€3.80/tonne) in backwardation from a backwardation of $7.50/tonne on 7 June, ICIS data showed.

The spread is at the weakest levels since 23 August 2012 when the spread was at $4.50/tonne in backwardation, it indicated.

Open-spec naphtha prices fell by $4.50/tonne from 7 June to $872-874/tonne CFR (cost & freight) at the close of trade on Monday, according to ICIS data.

In open market trading, the first-half August/first-half September spread traded at $6/tonne in backwardation, traders said.

Meanwhile, the naphtha crack spread against July Brent crude futures narrowed to $91.88/tonne on Monday from $98.25/tonne on 7 June, ICIS data showed.

The crack spread is now at the lowest levels since 22 May 2013 when the crack spread stood at $90.65/tonne, it showed.

Around 800,000 tonnes of arbitrage naphtha from northwest Europe, the Mediterranean, Russia and the US have been booked for July arrivals.

For June, 1.1m-1.15m tonnes of the material is expected to arrive in Asia, traders said.

However, some of the second-half June volumes were being spilled over to deliveries in the first half of July because of a lack of strong demand outlets, they added.

However, some players still too many cargoes in hand and are attempting to push up naphtha prices despite of a decrease in deep-sea imports, traders said.

The fall in arbitrage supply was a result of firm gasoline blending demand in northwest Europe, where motor gasoline supplies are being shipped to West Africa, they said.

But the strength from gasoline blending seemed to be tapering off, resulting in the weakening of naphtha backwardation, the traders added.

($1 = €0.76)

By: Felicia Loo

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