Naphtha cracks in Asia surge to 18 week high

06-Sep-12
In line with lower Brent crude, naphtha price in Asia eased to a two-session low of US$997/ton on Wednesday. However, margins, or cracks, rose for the fifth straight session to a 4-1/2 month high of US$142.4/ton on persistent tight supplies, as per Reuters. This has prompted South Korea's LG Chem to pay about US$18.50/ton premium to Japan quotes on a cost-and-freight (C&F) for a 25,000 ton naphtha cargo for H2-October delivery to Yeosu port, and US$19/ton premium for another 25,000 ton cargo for H2-October delivery to Daesan port. These are the highest LG Chem has paid for spot naphtha since late April. This uptrend in prices is expected to last for some time, but beyond a certain price level, petrochemical makers will have to cut cracker runs. How high prices can go will depend on the weak economic situation in China and Europe.
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