Asia’s naphtha prices under downward pressure on falling BD

27 June 2013 11:25  [Source: ICIS news]

SINGAPORE (ICIS)--Asia’s naphtha prices were being undermined at the close of trade on Thursday, shrugging off the gains in global crude futures as concerns over weakening butadiene (BD) prices weighed on the petrochemical feedstock market, traders said.

No physical naphtha trades were transacted, while open-spec naphtha prices for the first half of August delivery were softer at $854.50-856.50/tonne (€658.00-659.50/tonne) CFR (cost & freight) Japan, down by 75 cents from 26 June, ICIS data showed.

The naphtha crack spread versus August Brent crude futures weakened to $89.15/tonne from $95.75/tonne from a day ago and the intermonth spread between the first-half August and first-half September contracts narrowed to a backwardation of $5.00/tonne from a backwardation of $6.25/tonne over the same period, the data indicated.

In fact, the outright naphtha prices have fallen from $869.00-871.00/tonne CFR Japan a week ago, it stated.

“The BD market is so bad and it is getting worse,” said one trader in northeast Asia.

The spot BD prices tumbled for the week ended 21 June, falling by $110-120/tonne to $1,230-1,260/tonne CFR NE (northeast) Asia week on week. BD prices were at $1,450-1,500/tonne four weeks ago, according to ICIS.

Surplus BD stocks and weak demand were factors behind the weakening BD market, market participants said.

The naphtha market is also facing oversupply in the region, traders said. Demand, on the other hand, is at best stable, they added.

($1 = €0.77)

Additional reporting by Helen Yan

By: Felicia Loo

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