Asia's naphtha dipped to a two-session low on Thursday, while cracks hovered around a two-month high supported by firm demand from the West, as per Reuters. At least 140,000 tons of Gulf cargoes have been put on options to sail to Northwest Europe. This possibility of Gulf cargoes being moved away from the Asian market has boosted sentiment. However, uncertainty shrouds the duration of this rally, given that Indian exports for August are to stay high and demand from Taiwan's Formosa, Asia's top naphtha buyer, may not emerge until later. Traders estimate Formosa to buy cargoes for October, but not September. It is anticipated that the market could soften from next week because fundamentally, there are no factors to support a stronger market in the East other than the fact that it is mirroring the strength in the West. Western demand for naphtha to be used in gasoline may also not hold up. Brazilian gasoline demand could stay strong, but the summer driving season in the U.S. is nearing its tail end.
The price for front-month H1-September open spec naphtha slipped to US$993.50/ton , while cracks rose by over a dollar to US$113/ton premium.