A minimum of 300,000 tons of naphtha will find its way into the Asian markets from Europe and South America, landing here in April. Reduced freight rates and last week’s fleeting downturn in European naphtha prices has reopened the arbitrage window from the West to Asia. As freight rates have dipped to US$30-32/MT for a LR 1 cargo, CFR Japan naphtha is assessed at US$425/MT for H2-April delivery clips, FOB Med naphtha valued at $365.25/MT Monday and a premium of about $5/mt for open spec naphtha from the Mediterranean.
4 long-range 1 vessels and few medium range vessels have been fixed for loading in the H1-March from Spain, the Mediterranean, Greece and South America by Repsol, Vitol, Total and Glencore.
Repsol has fixed 55,000 tons to load on March 15 from northern Spain for Japan at a lump sum cost of US$1.75 mln. Vitol has fixed 2 cargoes each of 55,000 tons- one to load around middle of March from the Mediterranean for Japan at a cost of US$1.7 mln, and a second load from the Mediterranean on March 8 destined for the Far East at US$1.6-1.65 mln. Total has 30,000 mt loading from Banias over March 1-3 for either Singapore or Japan. Glencore has fixed 55,000 mt from Greece and several MR cargoes from South America, all slated to arrive in Asia in April. The trading house is still working on more cargoes. Shell has put on subs 55,000 mt for loading March 10-15 from the Med for delivery to Japan on BW Columbia.
How long the arbitrage window will continue to stay open remains uncertain in the face of dampening mood in Asia on deteriorating demand from South Korea, increased supply from India, arbitrage influx and news of potential steam cracker shutdowns in Taiwan.