Highest Western naphtha for 2015 to arrive in Asia in December

20-Nov-15

Asia will receive around 2 mln tons of naphtha in December from the West, including Europe and the Mediterranean, traders said on Wednesday, in what would be the largest such monthly imports since September 2014, as per Reuters. Firm demand, driven by a lack of liquefied petroleum gas (LPG) and high production at petrochemical units to feed appetite for plastics, will easily absorb the large inflow of cargoes and keep markets balanced, traders said. LPG, also used for heating, can replace 5 to 15% of naphtha in some Asian petrochemical units. "Some months, we see Asian demand for western cargoes falling to as low as 1.3 or 1.4 mln tons, but we need about 2 mln tons in December. So the amount of cargoes coming in is just right to cater to demand," said a Singapore-based trader. "But I do not expect the intermonth spreads to return to levels of US$10./ton or more. I expect the intermonth spreads to be capped at (around) US$5," he added, pointing out that there were no severe shortages. Intermonth spreads refer to the difference between the front-month benchmark open-spec price versus the following month. A higher front-month price against the following month reflects a strong market.