Asian naphtha market may firm on less arbitrage flows, year-end demand

18-Sep-13

The Asian naphtha market may firm up into the last two months of 2013, on curtailed arbitrage flows likely to tighten supply balances and year-end demand mopping up excess naphtha supply from the higher arbitrage arrivals in August and September, as per sources in Platts. Market sources estimated that Asia will receive around 500,000-600,000 mt of naphtha from Western arbitrage flows in October, significantly less than the estimated monthly average of 1.1 million mt in August and September. But despite lower volumes of arbitrage supply arriving in October, the market may only feel the impact of the reduced supply from the November delivery period, as surplus arbitrage cargoes from September that cannot be absorbed will likely be rolled over into October. An estimated 500,000 mt of surplus naphtha will be rolled into October, bringing total arbitrage volumes for October to up to 1.1 million mt.