About 3 mln tons of naphtha from the Mediterranean and Europe found its way into Asian markets between January to September 2008. South Korea alone needed to import on a monthly basis, around 1.3 mln. This scenario has done an about-turn as Asian cracker operators reduced run rates as petrochem demand has collapsed in Asia amid the global financial crisis. Some players that included Taiwan's CPC Corp and YNCC even had to pay demurrage as vessels carrying naphtha awaited indefinitely to unload the parcels into their tanks. Fundamentally, Asia has been short of naphtha, but in a path breaking move, Asian naphtha has been West-bound this month.
An unparalleled total of almost 1 mln tons of naphtha from Asia has been shipped to Europe and the Mediterranean between October and November, as per Reuters, as a persistent supply glut and pathetic demand in Asia keep the reverse arbitrage open. With this situation poised to persist, market players feel that the East-West trades will continue throughout December, but not at such high volumes. Europe, that does not fundamentally fall short on naphtha supply, has found itself short supplied because of the hurricanes in USA that affected its gasoline production between August and September. Hence, it can absorb the supply glut from Asia. But as Europe's supply gradually increases, where will the naphtha from Asia find markets?