In line with stronger Brent, naphtha in Asia rebounds from 2 month low to 2 session high

13-Apr-12

Naphtha in Asia rebounded from a two-month low to reach a two-session high on stronger Brent crude on Thursday, while front-month premiums for H2-May and H2-June, were at US$17.5/ton and margins, at US$156/ton, have peaked to a three week high on robust demand, as per Reuters. These levels were last seen in the third week of March. The market is expected to get impacted by an emergency shutdown at MRPL due to stoppage of water supply from Nethravathi river, which could lead to demurrage charges due to a delay in unloading crude and products. Apart from the emergency shutdown of two crude units at MRPL, naphtha exports from India for April dropped to less than 750,000 tons, about 20% lower than previously projected. Malaysia's Titan came forward to buy another 30,000 ton cargo, making this its third spot cargo for May arrival. Premiums are estimated to be slightly lower than the US$15/ton to Japan quotes on a cost-and-freight (C&F) basis paid earlier for a mid-May cargo. Formosa has bought 100,000-125,000 tons of open-spec naphtha for H2-May arrival at premiums of US$16.50-17/ton to Japan quotes on a C&F basis. This was lower when compared to the premiums of about US$21-23/ton Formosa had paid previously for up to 150,000 tons of naphtha for H1-May arrival. Spot premiums are still being sustained at pretty firm levels due to tight supplies, but have undergone some slight technical correction as they had gone up too high.