European naphtha exports to Asia rise on reduced European demand due to maintenance shutdowns

12-Apr-10

European naphtha arbitrage exports to Asia will rise in April after slowing in March. The increase in export volumes can be attributed to reduced demand in Europe as a result of maintenance shutdowns at petrochemical plants that has lowered demand for the feedstock and reduced prices. Dow Chemical Co plans to shut down a plant and steam cracker in Germany this month for its biggest-ever maintenance works. Seven plants including the ethylene plant on the DCG site at Boehlen, Germany, will be idled for “extensive, legally required inspections”. The company plans to resume normal operations at the site in early June. Currently, the Asian market is short and will need the naphtha from Europe. At least 195,000 metric tons of naphtha is set to move to Asia from northwest Europe and the Mediterranean so far, according to Millennium Chartering Pte. The total shipment for the month is estimated at between 250,000 tons and 300,000 tons, according to a survey of Europe-based traders. Benchmark Japan open-specification naphtha rose to US$771.50/ton on January 11, have dipped to US$737/ton in a deal where Cargill Inc. bought 25,000 tons for Hi-June delivery from Royal Dutch Shell Plc. The delivered cargo price in Europe was at US$715/ton. The arbitrage works because of savings made on freight to consumers in Europe as well as premiums to cargoes delivered to buyers in Asia. Supplies will reduce in Asia as crackers come into operation- Shell started production at its new 800,000 tpa ethylene plant in Singapore on March 22. Indian Oil Corp could cut naphtha exports as it is to use over 2 mln tons of naphtha at its 857,000 tons cracker when it is running at full capacity.