NWE naphtha back into backwardation despite steam cracker shutdowns in Asia

The prompt European naphtha market nudged back into backwardation on Tuesday despite reports of steam cracker shutdowns in Asia and a finely balanced European market, as per Platts. The European naphtha market is currently hanging in the balance with open spec cargoes fetching small premiums to swaps despite crack spreads languishing at around minus US$7/barrel, in a structurally long market. It is reported that despite scarce prompt availabilities, and that gasoline is pulling, the market looks rather balanced. Platts assessed the inter-month spread between July and August in a contango of US$1.50/mt, while the contract showed a small backwardation of up to US$2/mt on Tuesday morning. Platts last assessed a backwardated market between the balance and front month naphtha swap on June 1. This move into backwardation, which typically represents a market short of supply in the prompt end, was confusing some traders given a lack of exports east resulting from a number of downstream problems in Asia. Red Sea cargoes were possibly on the way to NWE, given cracker outages in Asia. South Korea's LG Chem plans to shut its 900,000 tpa steam cracker in Daesan. A shutdown continues at Taiwan's Formosa Petrochemical 800,000 tpa No. 1 naphtha-fed steam cracker at Mailiao caused by an LPG pipeline fire in May.
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