Naphtha prices in Asia rebounded from a near 21 month low to reach a three-session high on Monday while margins rose for the third session to a 5 session high of US$28.35/ton premium, as per Reuters. Open-spec naphtha price for front-month H1-August was at US$706.50/ton, marginally up by about 1.3% from levels seen on Friday.
Sentiments have improved on expectations of lower Indian and European naphtha exports on domestic demand and refinery run cuts. India continues to churn out less spot exports due to strong domestic demand for gasoline while the U.S. summer driving season will draw away more European naphtha, leaving less for Asia. Naphtha can be reformed into gasoline or be blended with gasoline. Asia is structurally short of naphtha, and without Europe and the Mediterranean pushing their volumes to the Far East, it should not take long to revive prices of the petrochemical feedstock. However, Europe's refineries have cut runs, and this would limit its supplies.
The stronger market sentiment among sellers has resulted in South Korea's Honam Petrochemical having to pay more for supplies for July 2012 to June 2013 delivery vs prices for a current 12-month contract until December 2012. |
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