Naphtha's prompt inter-month timespread surged to a near one-month high on Monday as prospects of firmer physical demand supported sentiment among traders, as per Reuters. The November/December contract was transacted several times in the over-the-counter (OTC) market in a backwardation of $10.50 per tonne, the highest since October 1, according to Reuters data.
Taiwan's Formosa Petrochemical Corp will raise operating rates at its 2.93 mln tpa naphtha cracking complex by 10 percentage points to 90 percent in three day, raising prospects for stronger demand for December shipments. A steady stream of demand for December shipments from South Korean petrochemical makers also helped to support sentiment among traders and had kept cash premiums at six-month highs.
Naphtha's prompt timespreads have been trading in narrow backwardations of US$8.25-9.50/ton since the beginning of October because of sliding gasoline values in Europe. Meanwhile, naphtha's CFR Japan November swap stood US$8/ton higher at US$935. Naphtha's November and December East-West (EW) spreads, the differential between Asian and European prices, were at US$2 and US$8/ton respectively.