Asian naphtha price and margins at three week high

22-Oct-12

Naphtha price and margins in Asia ended the week at a two-session high of US$976.50/ton and US$131.25/ton respectively, with the intermonth timespread hitting a three-week high of US$15/ton on strong fundamentals, as per Reuters. Intermonth premium is the difference between H1-December and H1-January prices. South Korea's Honam Petrochemical is seeking H2- November cargoes. It was unclear how many cargoes the firm bought, but the premiums paid were estimated around US$17.50/ton to Japan quotes on a cost-and-freight (C&F) basis, making this the highest in about 1-1/2 months. The high volumes of incoming Western naphtha has not helped to cool the market. About 700,000 tons of European/Mediterranean naphtha are expected to arrive in Asia in November, with the volumes reflecting a two-month high and a nearly 56% jump from the 450,000 tons for October. "Most of the naphtha arriving in November have already found buyers in Asia, so there are no concerns for the sellers," said a Singapore-based trader. Additionally, not all the naphtha is of paraffinic grade, which are needed for cracking into ethylene and propylene. The seemingly tight supply situation continued to prompt traders who were in need of cargoes to fork out steep premiums for Indian spot naphtha. But the market may soon turn towards buyers' favour as supplies are expecting to build up.