Arb reversal as Middle East ships 150,000 tons naphtha to West

11-Apr-11

Around 150,000 tons of naphtha will be shipped from the Middle East to the West, as per Reuters. The Middle East will export three naphtha cargoes west to Europe and USA instead of East to Asia, in a rare reversal of the usual arbitrage flows, as European naphtha prices flip to a premium at Asian levels this week. Two vessels carrying around 60,000 tons each were booked from the Arabian Gulf to travel to the West, while a third cargo was expected for delivery in Europe from the Suez Canal. BP Plc was said to have booked one of the 55,000-60,000 ton cargoes for the U.S. traders said, while the destination of the second vessel was unclear, but it is bound for the US market. Flows from the Middle East could continue to move West instead of to Asia if refinery maintenance and strong demand from the United States and Brazil continue to support European markets. Demand continues to be week in Asia although JX Nippon Oil and Maruzen have restarted their crackers. Mitsubishi Chemical Holdings Corp’s Kashima units are the two crackers that are still offline –with a total nameplate capacity of 851,000 tpa, wiping out around 52,000 tons of naphtha demand a week.