Global naphtha markets soar on vivid demand, firmer energy costs

06-Dec-13

Spot naphtha prices were driven higher in both Asia and Europe over the week, as per ChemOrbis. Naphtha prices have been on a steady firming trend for the last couple of months. Rising prices were mainly attributed to healthy demand for January. Plus, the energy complex, where crude oil prices recently rebounded after showing a volatile trend since the middle of September, provided support to the recent surge in naphtha prices. On the Nymex, crude oil futures for January deliveries posted a noteworthy gain of more than US$4/barrel week over week, boosted by lower stock levels in the US. The increase for ICE Brent crude futures lagged behind this increase while prices managed to edge up slightly below US$1/barrel over the period. In Asia, spot naphtha prices moved up by US$20/ton on a CFR Japan basis on the week. The latest figures represented a US$40/ton gain with respect to the beginning of November. Market sources blamed delayed deliveries for some cargos as one of the reasons behind stronger demand, noting that this was because of severe weather conditions. At the same time, some cargoes that were supposed to arrive in the region in December may come in January, which may cause supply to outpace demand in the coming month, sources highlighted. In cracker news, Taiwan’s CPC Corp. reduced operating rates at its No 6 cracker to 95% in December. The cracker has a capacity of 720,000 tpa. The company’s 385,000 tpa No. 4 cracker in Linyuan was shut in October for a 3 month-long maintenance. China’s Fujian Refining & Petrochemical shut its 800,000 tpa cracker in Fujian in mid-October for a turnaround that was scheduled to last for two months. In Europe, spot naphtha prices on a CIF NWE basis recorded larger increases over the week, bringing their total gain since early November to US$60/ton, according to ChemOrbis. The latest figures indicated a US$35/ton gain on the week. Market sources attributed the additional gains to low stock levels as poor refining margins hurt production in the region. Plus, not many import cargoes were considered to be heading to Europe, sources say, mainly due to adverse weather conditions.