Open-spec naphtha has peaked to a 14 month highs at levels of US$750/MT CFR Japan this week, after regional traders shrugged off the Dubai debt crisis that unfolded the previous week, according to ICIS. Rising input costs and supply constraints could continue to push up aromatics in Asia through December. Prices of aromatics - benzene, toluene and mixed xylenes - and some of its key derivatives products such as styrene monomer surged to new highs for the year along with prices of other petrochemicals such as paraxylene and purified terephathalic acid (PTA).
Restricted availability of naphtha in Asia will lead to worsening of the short supply situation of aromatics in the region. Relatively low operating rates of aromatics plants and delays in start-up in a few Middle East aromatics units exacerbated the supply situation in Asia. The recent increases in aromatics prices can be attributed to abundant credit, especially in key market China where the government has continued to bolster the domestic economy through repeated stimulus packages and easy money. Despite ample stockpiles, the Chinese continue to mop up almost all the spot toluene available in the market. If this buying spree continues at this rate, prices are expected to continue moving north. The availability of easy credit is likely to fuel further speculation in the SM market, where participants can borrow cheaply and leverage their trades. Many players were taking long positions in view of better market expectations in future months.