Asia naphtha crack spread at over two-month high, Q2 market looks soft

Melanie Wee

18-Mar-2019

SINGAPORE (ICIS)–Asia naphtha’s crack spread rose to its highest in over two months as steady demand provided market support, shrugging off supply that is expected to remain ample in the days ahead.

Spot naphtha market fundamentals were perceived as soft going into the second quarter, as downstream cracker turnarounds is expected to rein in demand.

Naphtha’s crack spread to ICE Brent crude oil futures, closed at $57.33/tonne on 15 March, up from $48.40/tonne in the preceding week, ICIS data showed.

The crack spread, a measure of naphtha refining margins, stood at a previous high of $66.90/tonne on 2 January.

A stream of buying for second-half April naphtha cargoes is helping to absorb regional supply that is viewed as plentiful.

South Korea’s Yeochun NCC (YNCC) has purchased around seven parcels of 25,000 tonnes at a premium in the mid $3.00s/tonne to spot CFR (cost and freight) Japan quotes for delivery to Yeosu.

South Korea’s Hanwha Total Petrochemical was understood to have also fulfilled its monthly spot intake of second-half April supplies.

Taiwan’s Formosa Petrochemical (FPCC) likewise secured around 100,000 tonnes of open-specification grade naphtha at a premium near the high $1.00s/tonne to its pricing formula for delivery to Mailiao.

Malaysia based Lotte Chemical Titan picked up two cargoes of around 25,000 tonnes each at a low single-digit premium to spot CFR Japan quotes, scheduled for second-half April delivery to Pasir Gudang.

A spate of cracker turnarounds in the second quarter is expected to rein in demand thus the possibility of a softer naphtha market at the time.

South Korea’s Hanwha Total Petrochemical will shut its Daesan cracker in late-March for maintenance to last for about 45 days, which will eventually lift its ethylene capacity.

Spot open-specification naphtha prices stood at $560.00/tonne CFR (cost and freight) Japan basis at early hours session on 18 March, down by $5.00/tonne from the previous close on 15 March in response to softer crude oil futures, according to ICIS data.

Reflecting rising supply, naphtha western arbitrage flows to Asia are estimated by traders to reach near 2m tonnes this month, which would surpass average monthly volumes at 1.5m tonnes.

(Top image: ShipSunDanAlliserREXShutterstock)

Focus article by Melanie Wee

READ MORE

Global News + ICIS Chemical Business (ICB)

See the full picture, with unlimited access to ICIS chemicals news across all markets and regions, plus ICB, the industry-leading magazine for the chemicals industry.

Contact us

Now, more than ever, dynamic insights are key to navigating complex, volatile commodity markets. Access to expert insights on the latest industry developments and tracking market changes are vital in making sustainable business decisions.

Want to learn about how we can work together to bring you actionable insight and support your business decisions?

Need Help?

Need Help?