Ample US naphtha moving to Asia, but flows slowing

09-Jan-17

US naphtha has been moving to Asia over the past month and is due to arrive in February, as US refiners seek to draw down high stocks in the face of low gasoline demand during winter, traders and shipping sources have been reported by Platts. At least four cargoes from the US Gulf Coast are due to arrive in East Asia next month, traders said. A cargo from Hawaii was also heard to have been taken by a South Korean refiner.

While the flows on the US Gulf-Far East route are likely to slow due to greater availability of cheaper volumes from India and the Middle East, some US material would continue to move to meet grade-specific requirements in Asia, sources said. "Heavy naphtha cargoes are still being imported from the US," a Singapore-based chartering executive with a global commodities trading company said.
Asian demand for paraffinic naphtha is normally sourced from India and Europe, sources said. There was talk about whether the US-Asia arbitrage will remain open, with some sources saying that with Asian demand yet to pick up at the start of the year, the moves did not indicate an opening of the US arbitrage to Asia.

Naphtha to Asia from the US Gulf Coast is usually a heavy or heavy full range grade. "But Asian demand for heavy naphtha is still not good," a trader said. With the arrival of these US Gulf cargoes, traders said the market for heavy full range naphtha looked more bearish than for open-specification naphtha favored by most Japanese and South Korean petrochemical makers.