UpdateAsia naphtha crack spread at $106.68/tonne on strong demand

12 July 2013 11:10  [Source: ICIS news]

(adds details, quotes throughout)

SINGAPORE (ICIS)--Asia’s naphtha crack values and intermonth spreads have strengthened to more than a month’s peak on Friday, underpinned by robust gasoline blending demand and strong buying needs of regional cracker operators, traders said.

The prompt naphtha crack spread against August Brent crude futures widened by 6% from Thursday to $106.68/tonne (€81.08/tonne) on Friday. The crack spread was assessed at $100.75/tonne on Thursday, ICIS data showed.

The naphtha backwardation for the second-half August and the second-half September contracts, widened to $9.00/tonne, from a backwardation of $8.00/tonne a day ago, the data indicated.

The spread was firmer compared with a backwardation of $5.75/tonne on 5 July.

“Sellers are minimising volumes due to high flat price, so there should be homes [for naphtha barrels],” said a trader.

Increased demand for naphtha as a gasoline blending component, along with high cracker utilization rates in northeast Asia, meant that high deep-sea cargoes from the western markets would be absorbed by buyers, traders said.

“Demand is good,” said an industry source.

The crackers in Taiwan, South Korea and Japan have been buying barrels in the week amid firming downstream derivatives markets, boosting the spot differentials consequently, traders said.

At the close of trade on 12 July, the first-half September contract was traded twice at $908.00/tonne, with the first deal changing hands from trading companies Mabanaft to Cargill, and with Japanese firm Itochu buying from oil major Shell in the second deal, traders said.

The open-spec naphtha contract for the second half of August delivery settled at $911.50-913.50/tonne CFR (cost & freight) Japan, down by $3.50/tonne from Thursday, on overall softer energy values, according to ICIS.

Nonetheless, on a week-to-week basis, the outright prices surged by $22.50/tonne, in tandem with higher weekly global crude futures, ICIS data showed.

($1 = €0.76)


By: Felicia Loo

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