Dip expected in naphtha exports from the West to Asia amid high supplies

23-Sep-14

1.8 mln tons of naphtha is expected to land in October in Asia from Europe, the Mediterranean and USA. As per Reuters, this is 10% lower than record-high volumes for September arrival. However, the volumes are still about 400,000 barrels above what Asia needs next month, leading to a situation where Asia struggles to digest a glut of naphtha. Amid dim expectations, Europe is expected to reduce supplies as strong gasoline demand from West Africa and supply disruptions could see a tussle for naphtha as a blend stock for motor fuel. Stocks of gasoline at Europe's Amsterdam-Rotterdam-Antwerp hub dropped in the week to Thursday to their lowest this year, down 6.4% to 597,000 tons, according to data from Dutch-based oil consultancy PJK International. "Naphtha demand from gasoline blenders is now quite strong as New York, West Africa, Brazil and the Red Sea are pulling gasoline from Northwest Europe," said a Singapore-based trader. Naphtha from Mohammedia, Morocco and Skikda, Algeria, which frequently sails east, was now booked by Brazil. However, the timeframe needed for the glut to dissolve is highly dependent on European exports to Asia. But the West should be sending less naphtha to Asia if gasoline remains strong, as per a trader.