Despite loss of demand from Japan, naphtha market in Europe remains tight as falling demand from Japan is outweighed by strong demand from the US and Brazil, as per ICIS. The market had been slightly oversupplied when the Japan earthquake struck on March 11 and there were fears it would lengthen further in the wake of the disaster. Several cargoes from northwest Europe and the Mediterranean are heading to USA. The forthcoming US driving season has recently increased demand for naphtha to be used in gasoline-blending. A second source said that material was also heading to Brazil for use in the gasoline sector.
In addition to this healthy demand, a curtailed supply has also added to tightness in the market.
Because of some refinery run cuts, even with a reduced arb [arbitrage] to Asia, the European market remains tight.
Despite Japan’s reduced consumption, some material is headed there regardless – a 75000 ton cargo from Norway and a second cargo from Morocco. However, some opine that as Japan’s own requirements for naphtha fall, all its unwanted naphtha is being exported to other Asian countries such as Taiwan, Korea and China.