Asia to get 1.7m-1.8m tonnes July arbitrage naphtha supply

By Felicia Loo

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SINGAPORE (ICIS)–Asia’s deep-sea naphtha imports for July delivery are expected to be 1.7m-1.8m tonnes, up from initial estimates of around 1.7m tonnes, traders said on Friday.

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

Europe’s demand for naphtha is slowing down in tandem with overall gasoline blending needs, the traders said.

“West African gasoline demand is not there right now,” said one trader.

Traders cited a few European naphtha cargoes in the prompt market that have remained unsold.

The expanded pool of cargo availability has led to a weaker backwardation in the naphtha market, according to ICIS data.

The spread between the first half of August and the first half of September narrowed to $4/tonne on 18 June from a backwardation of $5.75/tonne in the previous week, the data showed.

Meanwhile, the July arbitrage inflows were slightly lower compared with the estimated 1.8m-1.9m tonnes deep-sea material for June delivery.

June-delivery arbitrage volumes were higher owing to cracker production issues and outages in Europe.

But these crackers are gradually resuming operations, leading to a slight decline in arbitrage naphtha volumes available for Asia in July.

Italy-based Versalis will bring its Brindisi cracker back on line around 25 June following a planned maintenance, market sources said.

Versalis had postponed this maintenance from September 2014 to May this year because of a lengthy outage at its Porto Marghera cracker at the time.

The Brindisi cracker has the capacity to produce 440,000 tonnes/year of ethylene, according to ICIS data.

Separately, Repsol has lifted the force majeure on ethylene supply from its 702,000 tonne/year cracker at Tarragona, Spain.

The company early this month restarted the cracker following an unplanned shutdown. A technical problem in a boiler had led to the outage and the subsequent declaration of force majeure on its ethylene and butadiene (BD) produced at the Tarragona site.