11 October 2013 12:22 [Source: ICIS news]
LONDON (ICIS)--The northwest European naphtha supply is increasing as the arbitrage window to Asia remains closed and very few cargoes are moving east, industry sources said on Friday.
On Friday, the price spread between the regions was at $15/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.
"[There is] loads of supply in Europe and Russia. [It is] still hard to move [cargoes to Asia]," a second naphtha trader said.
"The market is absolutely long, people are calling, saying we want to sell you naphtha. Here [in Europe] a lot of naphtha crackers are down, so demand is very low," a petrochemical buyer said.
Demand from Asia has been poor because of bearish sentiment in the region, the buyer said.
Nevertheless, there is hope that the Asian demand will pick up in the near future as the cracker maintenance season in the region comes to a close.
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 = €0.74)
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