As Brent crude spiked, naphtha price continues to linger around a 6 week high of US$844/ton at the end of last week. Inter-month premium extended gains to stay at two-month high of ten dollars per ton as the market was firm on strong fundamentals, as per Reuters. The inter-month premium reflects the differential between front-month H2-August price and H2-September value.
Top refiner JX Nippon Oil & Energy Corp has announced plans to indefinitely shut all units at its 240,200 bpd Mizushima-B refinery after discovering that inspection records had not been properly kept. Some traders voiced concerns that a more than a month long shutdown could impact supplies, although Japanese buyers had not reacted to the situation as of Friday. The shutdown is expected to impact naphtha supplies to two crackers in Mizushima- Asahi Kasei and Mitsubishi Chemicals’ crackers with a total capacity of close to 900,000 tpa.
However, traders expect a better supplied market for the short term in August compared to July as Western exports will continue to stream in at steady volumes. About 400,000 tons of Western naphtha have been provisionally booked for next month arrival versus earlier expectations of just 150,000 tons.