July naphtha volumes in Asia from the West fall to 2013 low

13-Jun-13

Naphtha shipped into Asia in July from Europe and the Mediterranean will fall to the lowest monthly volume this year, down about a quarter from recent months, although the drop is likely to be temporary due to supply overhangs in the West, as per Reuters. Western naphtha volumes for July are expected at 760,000 tons, down from an average of nearly a million tons a month shipped to Asia over January to June. But the lower volumes could be only a temporary respite to sellers looking for higher premiums, because Europe is expected to continue to struggle with high stocks, assuming no deep refinery run cuts, outages or heavy maintenance. Besides being long on naphtha supply, Europe has also been struggling with inventory build-up this year due to maintenance at petrochemical units. About 2.9 mln tpa of ethylene capacity - of which more than 90% uses naphtha as a feedstock - went offline in the second quarter for maintenance. Even if these units were to resume operations, traders said, the gloomy European economic outlook may force some of the units to cut runs. That leaves Asia as the key export lifeline as it is structurally short of naphtha and its petrochemical capacity is still growing, traders said. If Asia's petrochemical units are operating at high rates, the region can easily digest at least 500,000 tonnes a month of western naphtha, according to traders' estimates.