Asia naphtha surges on upbeat US, China manufacturing data

03 December 2013 10:30 Source:ICIS News

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SINGAPORE (ICIS)--Asia’s naphtha prices surged on Tuesday to the highest levels since end-February this year, beating expectations of a price fall as positive economic data from the world’s top economies fuelled market confidence.

Open-spec second-half January prices rose by $15.50/tonne (€11.47/tonne) from 2 December to close at $987.50-989.50/tonne CFR (cost and freight) Japan on Tuesday, ICIS data showed.

“There is a lot of supply. However, demand is very healthy,” said one market participant.

There were a couple of physical trades, with the first half of February contract done at $985.00/tonne from Vitol to trading firm MRI.

The second deal involved the State Oil Company of Azerbaijan Republic (SOCAR) buying the first-half February/second-half February spread from Glencore at a backwardation of $8.00/tonne, according to traders.

The overall crude futures had expanded on the back of positive news in the manufacturing sectors in China and the US.

The US manufacturing sector expanded at its fastest pace in more than two years, with employment data also showing improvement. In China, manufacturing growth was at an 18-month high.

China’s purchasing managers’ index (PMI) in November stayed at its highest level of 51.4 since May 2012 for a second straight month.

The production sub-index for November rose to 54.5 from 54.4 in November, and purchasing volumes climbed to 53.6 in November from 52.7 in October, according to data from the China Federation of Logistics & Purchasing (CFLP).

In a sign of firm petrochemical demand, ethylene margin based on naphtha feed rose to $152/tonne in northeast Asia in the week ended 29 November, from $102/tonne in the previous week, according to the ICIS Weekly Margin report.

($1 = €0.74)

By Felicia Loo