Asia deep-sea naphtha imports rise to 1.8m tonnes for May

SINGAPORE (ICIS)–Asia’s deep-sea naphtha imports for May delivery are expected to rise to 1.8m tonnes, compared with 1.6m-1.8m tonnes in April, traders said on Monday.

The arbitrage imports hail from northwest Europe, the Mediterranean, Russia and the US.

Deep-sea naphtha volume in Asia has been on a steady increase from 1.4m-1.5m tonnes estimated for March.

European petrochemical demand for naphtha is poor as many downstream producers are covered for now and are reluctant to purchase additional feedstock to run their crackers.

Many are maximising alternative feedstock propane wherever possible as it has become much cheaper in the approach to summer. In addition, propane yields more ethylene, which is currently tight in Europe.

A better arbitrage opportunity from the US is encouraging West African gasoline importers – a traditional destination for European gasoline, and hence blendstock naphtha – to choose product from the country over that from Europe.

US refinery utilisation rate was at 91.2% last week, according to data from the Energy Information Administration (EIA), and production of gasoline is healthy and could be behind the healthy exports to West Africa.

Nonetheless, a backlog of vessels waiting to unload off the Nigerian coast has meant a reduction in demand over the past few days. Exceptional Nigerian demand for gasoline had provided strong support to the European naphtha market in the first quarter.

US gasoline blending demand for naphtha itself is down from the first quarter as paraffinic naphtha is used less in US summer-grade gasoline. Europe is structurally long on gasoline and mainly relies on exports to the US and West Africa to absorb its excess product.

Additional reporting by Cuckoo James in London