Europe naphtha prices fall sharply from 2-month high on crude futures

21 June 2013 13:40  [Source: ICIS news]

LONDON (ICIS)--Europe naphtha prices are down by approximately $30/tonne week on week on softer ICE Brent crude oil futures, falling sharply from the two-month highs of late last week, industry sources said on Friday.

Naphtha traders said they expect the softer prices to boost trades in what is a slow market, although signs of a revival are yet to be seen as market fundamentals remain weak.

Naphtha prices were assessed at $838-840/tonne (€637-638/tonne) CIF (cost, insurance & freight) NWE (northwest Europe) late on Friday morning, down from two-month high of $965-968/tonne last Friday.

The spot price first declined to the $830s/tonne CIF NWE on Thursday, when a sharp drop in crude oil prices drove naphtha down to its lowest level in June.

August ICE Brent crude oil futures tumbled by more than $4.00/bbl on Thursday on concerns over weak manufacturing data from China and the US Federal Reserve's plan to rein in its economic stimulus programme.

Despite the price decrease, trading activity in the northwest European naphtha market remains subdued.

Traders managed to sell only one naphtha cargo on the open market platform this week, compared with eight trades over the same period last week, as buyers and sellers stood firm on their pricing ideas amid the volatile ICE Brent crude oil futures.

On Thursday, Shell and Morgan Stanley bid unsuccessfully at $830-832/tonne CIF NWE, refusing offers at $837-842/tonne CIF NWE from BP, Gunvor, Shell, Total and Glencore.

The northwest European naphtha market is oversupplied because of minimal exports to the US and Asia, even as market players are waiting to gauge the impact of the first naphtha shipments arriving in northwest Europe from the Russian Ust Luga terminal.

"There are some cargoes loaded from Ust Luga. It will be more visible next week... all these ships are loading next week," a naphtha buyer said.

The Mediterranean has been receiving healthy volumes from the Skikda refinery in Algeria, adding to the supply influx.

"We see Algeria producing close to full speed again. They had some issues with their refineries," the naphtha buyer said.

On Thursday, independent stock data revealed naphtha inventory levels at the Amsterdam-Rotterdam-Antwerp (ARA) hub were still high.

A naphtha trader said: "[The market is] very, very weak. Cargoes are building up in ARA waiting for a home."

($1 = €0.76)

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By: Cuckoo James
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