Differential between Asian and European naphtha prices at more than four month low

22-Aug-12

Naphtha's prompt September East-West (EW) spread, the differential between Asian and European prices, stood at a more than four-month low on Wednesday as traders tried to shut the arbitrage window from Europe to prevent any further inflows that might threaten to further weaken sentiment, as per Reuters. Asia expects to receive about 800,000 tons of Western naphtha in September, the highest volume in five months. However, not all of the expected volumes have been allocated and some cargoes have already been rolled from September into October because of lack of outlets. There were no immediate estimates of how much of the September volumes, out of the anticipated 800,000 tons expected to reach Asian ports in September, remains unsold. The prompt September naphtha EW fell a further US$1.13/ton to a more than four-month low of US$4. This comes after a US$2.37/ton drop in the previous session as demand from petrochemical makers had begun to taper off. Despite the steep drop in EW prices, brokers said liquidity for the spread remained poor and was mainly driven by traders who were aggressively lowering offers.