Naphtha cracks, the premiums/losses obtained from refining Brent crude into naphtha, stood at US$128/ton in the middle of last week, falling by almost 14 dollars in a single day, as strong demand from North Asia starts to ease. Cracks are, however, are still more than US$112.50/ton seen a month ago.
Started in March, Shell's 800,000 tpa ethylene cracker in Singapore has a minimum monthly requirement of 30,000 tons of naphtha as feedstock and Thailand's Map Ta Phut Olefins’ 900,000 tpa naphtha cracker needs additional imports of around 110,000 tons as its domestic supply falls short of meeting demand. This additional naphtha demand had helped sustain market sentiment.
This demand is expected to ease shortly, as Shell is expected to reduce its use of naphtha to marginal levels as capacity gets ramped up to over 80%, while the use of heavy oil will increase.