Naphtha price and margin end previous week at three-week low

25-Feb-13
Naphtha price and its margin in Asia remained at a three-week low on Friday, at US$999/ton and US$140.8/ton respectively, as naphtha demand may slide further as buyers sought alternative feedstock, as per Reuters. Traders said cheaper liquefied petroleum gas (LPG) was exerting pressure on naphtha but most were convinced that the threat would be short-lived given that petrochemical units were mostly running at maximum capacity and naphtha supplies from India were low. LPG can replace about 5 to 15% of naphtha in some Asian petrochemical units. Sellers were also hopeful that a tender issued late on Friday by Asia's top naphtha buyer Formosa Petrochemical Corp would help lift the market. The Taiwanese firm is seeking cargoes for H1-April arrival at Mailiao in a tender that is due to be awarded on Feb. 26. Although Formosa has managed to buy LPG for March, it was unclear if it had secured any LPG for April. "The naphtha market has been extremely overheated recently and is cooling down, but it is not weakening. The overall picture still paints a firm market," said a Singapore-based trader in Reuters. Spot naphtha premiums supported this view. All through Asia, naphtha prices were setting new highs earlier as supplies were acutely tight.
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