Asia’s prompt naphtha backwardation weakens on heavy supply

30 August 2013 11:24  [Source: ICIS news]

SINGAPORE (ICIS)--The open-spec naphtha backwardation in Asia narrowed on Friday as hefty prompt supplies undermined the market, according to traders.

The intermonth spread between the first-half October and the first-half November contracts weakened to 50 cents/tonne (38 cents/tonne) in backwardation at the close of trade on 30 August, compared with a backwardation of $3/tonne in the previous week, ICIS data showed.

“The front-month is heavy,” said a trader, referring the ample availability of cargoes in Asia.

On 30 August, the second-half October contract changed hands at $962/tonne CFR (cost & freight) Japan in open market trading, traders said.

The first-half October naphtha prices closed lower than Thursday at $960.50-962.50/tonne CFR Japan as global crude futures softened following sharp increases over the past few sessions, according to ICIS.

India’s naphtha shipments for September are estimated to be 750,000-800,000 tonnes, compared with the August shipments of around 750,000 tonnes of naphtha, traders said.

Adding to the surplus woes, the arbitrage naphtha flows to Asia were seen at 1.0-1.3m tonnes for September, similar to the 1.2m tonnes booked for August arrivals, they added.

($1 = €0.76)

By: Felicia Loo

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