Europe naphtha arb shut this week, after briefly opening last week

04 October 2013 14:35  [Source: ICIS news]

LONDON (ICIS)--The naphtha northwest European arbitrage window to Asia has shut again, after briefly opening last week, industry sources said on Friday.

Prior to that, the arbitrage had been closed for weeks in a row. On Friday, the price spread between the regions narrowed to $12/tonne for October and $14/tonne for November spot cargoes.

While dependent on factors such as freight rates, a minimum spread of $15-20/tonne is considered to be necessary for an arbitrage to open east.

Asia is sufficiently well-supplied, especially because of healthy exports from the Middle East, and is refusing surplus volumes from Europe, European traders maintained.

Nevertheless, limited naphtha volumes are still being exported to Asia as often the netback is calculated to be equivalent or even better than selling the cargoes within the domestic markets.

Most of the volumes are being moved from the Mediterranean to Asia, and very few from northwest Europe. The Mediterranean region will export at least 160,000 tonnes of naphtha volumes to Asia in early October, shipping fixtures revealed this week.

Europe is structurally long on naphtha, and sellers need to export to the US gasoline and Asian petrochemical sectors to keep stocks in balance.

($1 = €0.73)

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By: Cuckoo James
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