Asia's naphtha price ended the previous week at a two-week low, with cracks at a 1-½ month low, on muted sentiments by demand loss from Taiwan' Formosa following a cracker shutdown, as per Reuters. The persistent gloomy mood in Asia since late last week vs healthy demand in Europe caused the physical East-West naphtha differentials to turn negative for the first time since April 1. This could pry open the rare 'reverse arbitrage' window for the second time this year as traders will find selling cargoes to the West more lucrative. Some of the where they are Western barrels originally booked to arrive in Asia next month may not be shipped out. Traders may even send Red Sea barrels (which usually come to the East) to the West.
The gloomy outlook came at a time when Saudi Aramco is to hold its term talks with Asian buyers next week in London to sell naphtha for H2-2011 lifting. ADNOC's offers of pentane-plus at US$27/ton to its own price formula on a free-on-board (FOB) basis for July 2011-June 2012 lifting is likely to be met with strong resistance in the current market scenario.
Price for front-month H1-July fell by seven dollars to US$957/ton, its lowest since May 6 at US$955/ton.