Asia naphtha nears 6-month high at above $600/tonne on strong crude

Melanie Wee

23-Apr-2019

SINGAPORE (ICIS)–Asia’s naphtha prices breached the $600/tonne mark to their highest in nearly six months, bolstered by strength in global crude oil futures and petrochemical demand, which is set to continue.

On Tuesday morning, open-specification naphtha prices for first-half June delivery stood at $611.00/tonne CFR (cost & freight) Japan basis, a jump of $22.50/tonne from the close on 18 April, ICIS data showed.

The Aomi International Container Terminal in Japan (Photo by Kimimasa Mayama/EPA/REX/Shutterstock)

Spot prices are up by about 7% from month-earlier levels, according to ICIS data.

Prompt-month naphtha prices were last seen at levels above $610/tonne in end-October 2018.

At midday, ICE Brent June crude oil futures were up 41 cents at $74.45/bbl, following an abrupt move by the US to end waivers on Iranian oil purchases.

Reflecting the buoyant market sentiment, naphtha’s crack spread to June ICE Brent crude oil futures stood at $53.68/tonne on 22 April, a three-week high, ICIS data showed.

Steady downstream end-user petrochemical demand is helping to soak up regional supply.

South Korea’s Hanwha Total Petrochemical was understood to have secured first-half June delivery naphtha at a premium at around $5.00/tonne to spot CFR Japan quotes for delivery to Daesan.

Prior to this, the firm paid a similar premium to spot quotes for second-half May supplies.

Other northeast Asian end-users are likely to emerge with fresh first-half June spot requirements.

Market sentiment was in part lifted by an expected reduction in western origin deep-sea cargo arrivals.

Arbitrage shipments to Asia are estimated to reach around 1.6m tonnes this month, down from an average of 2m tonnes in March.

Naphtha is a key petrochemical feedstock for downstream crackers in the manufacture of olefins and aromatics.

Focus article by Melanie Wee

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