Around 1-1.1 mln tons of deep-sea naphtha supply will land in Asia in May, similar to the levels in April, and the influx will be taking place during a time when petrochemical demand is on a decline, as per traders in ICIS. The volumes included an unusually huge US abitrage naphtha supply of 300,000 tons. It might be difficult to seek out buyers for the arbitrage material, which is mainly heavy naphtha that hails from northwest Europe, the Mediterranean, Russia and the US, traders said.
A trader opined that the market may not be able to absorb the huge volumes, which could lead to a possibility for some people to bear demurrage until June. At midday, open-spec H2-May contract fell to US$862.50-865.50/ton (€655.50-658.78./ton) CFR (cost & freight) Japan, down by US$7.50-8.50/ton from Thursday, also partly because of overnight losses in global crude oil futures. At the close of trade on Thursday, the naphtha crack spread against May Brent crude futures tumbled to US$81.43/ton in response to the persistently high arbitrage volumes, according to ICIS data. The crack spread hit the lowest level since 14 August 2012 when the crack spread stood at US$78.25/ton. Meanwhile, northeast Asia’s ethylene import prices were at US$1260-1280/ton CFR NE Asia at the close of trade on 11 April, down by US$20/ton at the high end of the range, according to ICIS data. The downstream petrochemical sector was hit by recent operating rate cuts for crackers in the region and poor margins in the derivatives market.