Asia naphtha loses momentum on crude oil slide

SINGAPORE (ICIS)–Asia’s naphtha prices fell alongside losses in global crude oil futures, amid limited demand and burgeoning supply from deep-sea cargo flows to the region.

On Tuesday morning, open-specification naphtha prices for first-half January delivery averaged at $541.00/tonne CFR (cost and freight) Japan, down by $7.00/tonne from the Asia close on 18 November.

Crude oil prices slumped overnight amid uncertainty concerning a trade agreement between the US and China. January ICE Brent crude oil futures settled lower by more than 1% at $62.44/bbl.

CFR Japan naphtha prices eased to a one-week low, although still higher than $532.00/tonne levels a month earlier, according to ICIS data.

Naphtha physical buying has been steady at best, while cargo premiums have since eased.

Taiwan’s Formosa Petrochemical (FPCC) bought 80,000-90,000 tonnes of open-specification naphtha for 21-31 December delivery to Mailiao at a premium of around $18/tonne to its pricing formula.

The premium was down from at least $24/tonne premium levels FPCC forked out for first-half December supplies.

Taiwan’s state-owned CPC Corp has yet to issue spot buying tenders for December cargoes, as its No 4 cracker with a 385,000 tonne/year ethylene capacity is undergoing scheduled maintenance from early November until January 2020.

On the arbitrage front, stronger cargo arrivals from northwest Europe and the Mediterranean regions may well add to Asia’s surplus supply.

Estimated volumes of over 1.5m tonnes of western naphtha could reach Asia in November, up from around 1.0m-1.1m tonnes in October.

Naphtha’s crack spread, a measure of its refining margin, fell to $73.55/tonne on 18 November, down from the previous close at $84.15/tonne on 15 November, ICIS data showed.

Focus article by Melanie Wee

Photo: Cranes and containers in Osaka port. Japan. (Photo by Andy Wong/AP/Shutterstock)