Amid higher supplies and low volumes, naphtha crack in Asia dipped to a two-session low of US$30.18 in its first day of trading Friday, as most traders have yet to return from the New Year holidays. As per Reuters, traders expect spot prices to stay low due to persistently high supply and sufficient quantities of alternative feedstock liquefied petroleum gas (LPG) made available to petrochemical plants in the West during the winter season. Conventionally, petrochemical plants in Europe abandon LPG as feedstock for naphtha as LPG prices (also used for heating) become expensive.
When traders get active next week, at least three sale tenders for up to a total of 61,500 tons of naphtha for mid- to H2-January loading from Haldia and Kochi by India's Bharat Petroleum Corp Ltd and Indian Oil Corp are expected to be awarded. Prices of propane, one of two key LPG products, released by Saudi Aramco for January delivery plunged 23% to US$425/ton compared to December. Naphtha cargoes that had been sold out of India for January 2015 loading from various domestic ports averaged close to US$6.50/ton FOB basis, reflecting an 80% plunge in value when compared to the average for January 2014 at about US$34, Reuters data showed.
A glut that has weighed down Asia naphtha prices since September, and is expected to persist through at least February 2015, as per traders. 2015 is expected to be mostly challenging as higher supplies of LPG are expected to repeatedly displace naphtha in the West, prompting Europe to continue pushing excess naphtha to Asia. The volume of naphtha cargoes arriving in Asia from Europe, the Mediterranean and the United States was around 1.6 mln tons a month on average, about 45% higher than the 2013 monthly average.
05-Jan-15 
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