UpdateAsia naphtha falls on crude; crack spreads at five-month low

07 October 2013 10:57  [Source: ICIS news]

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SINGAPORE (ICIS)--Asia’s open-spec naphtha prices spiralled down on Monday on falling crude futures, with the crack spread tumbling to a five-month low on surplus cargo availability, traders said.

The second-half November contract fell to $890.25-892.25/tonne (€658.79-660.27/tonne) CFR (cost and freight) Japan, down by $14.25/tonne from 4 October, ICIS data showed.

At the close of trade on Monday, a first-half December contract changed hands from trading firm Glencore to Japanese trading firm Marubeni at $891/tonne, traders said.

“The physical market is weak. It is flooded with too much cargoes,” said one trader.

The naphtha crack spread weakened to $79.38/tonne against November Brent crude futures, down by 8.1% from 4 October, when the crack spread stood at $86.35/tonne, ICIS data indicated.

The crack hit the lowest levels since 7 May this year, when it closed at $76.07/tonne, according to the data.

At 17:41 Singapore time (10:41 GMT), November Brent crude futures fell by $1.11/bbl to $108.35/bbl.

Meanwhile, the intermonth naphtha spread between the second-half November and the second-half December contracts was unchanged at a thin backwardation of $1.50/tonne, ICIS data showed.

The Asian market was loaded with supply from refiners in India, the Middle East and Europe, notwithstanding plant maintenance in Europe, traders said.

Asia is expected to receive around 800,000 to a million tonnes of deep-sea naphtha from Europe, Russia and the US in October, up from initial estimates of 600,000 tonnes, they said.

India’s naphtha shipments for October are estimated to be 800,000 tonnes, compared with 750,000-800,000 tonnes shipped out in September.

Asia receives 2.5m-3.0m tonnes of naphtha from the Middle East each month, of which 2.5m tonnes are term while the remainder is spot supply, traders said.

Compounding the situation is the weakened blending needs in the gasoline sector that weighed on naphtha demand.

($1 = €0.74)

By: Felicia Loo

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