Asian naphtha price moved toward a one and half week high of US$862/ton, while margins surged nearly 20% to week's high of US$70.2/ton premium as strong European demand supported the Eastern market, as per Reuters. In just two days, naphtha margins have spiked by nearly 40%.
Honam Petrochemical came forward to buy two 25,000 ton naphtha cargoes at a premium of US$2/ton to Japan quotes on a cost-and-freight basis, the lowest premium in four weeks in South Korea, to be delivered in H1-September to Daesan and Yeosu. This deal is believed to mark the end of low premiums for now as the market has bottomed out on robust petrochemical profits in Europe. Ethylene prices in Europe have seen a sharp upward revision that will help support demand for naphtha feedstock. Ethylene is a raw material needed for plastics. Asia, which is structurally short of naphtha, will need to raise its prices if it wants to keep Western exports coming to the East.