Asia’s naphtha prices at over two-month high on steady demand

SINGAPORE (ICIS)–Asia’s naphtha prices are finding support from regional buying, which is anticipated to hold steady in the near term, keeping market fundamentals buoyant.

At the intra-day session on 1 June, open-specification naphtha spot prices for second-half July delivery averaged at $320.00/tonne CFR (cost & freight) Japan, as the forward month contracts rolled on Monday.

Spot naphtha prices rose by some $20/tonne from the previous session on 29 May, and were at their highest in over two months, since 11 March at $329.00/tonne CFR Japan, ICIS data showed.

Naphtha prices tracked earlier gains in global crude oil futures amid reduced production and expectations of demand growth as countries emerge from coronavirus lockdowns.

However, the upside in crude oil prices were limited by riots over the weekend in the US, combined with tensions between the US and China.

Asia’s naphtha markets were buoyed by a bout of spot purchases as South Korean end-users snapped up cargoes for July delivery.

South Korea’s Hanwha Total Petrochemical has purchased heavy full-range naphtha at around parity to a slight discount to spot CFR Japan quotes, scheduled for first-half July delivery to Daesan.

Yeochun NCC (YNCC) has also bought first-half July delivery naphtha cargoes at around parity to spot CFR Japan quotes.

In comparison, YNCC previously paid a discount to spot CFR Japan quotes for first-half June supplies.

Asia’s naphtha crack spread has held firm at $40/tonne levels throughout the week ended 29 May. The crack spread, a measure of the product’s refining margin, had slumped to negative zone at -$1.42/tonne on 14 May.

Focus article by Melanie Wee