Naphtha crack in Asia extends losses to over one-week low

18-Jul-14

The Asian naphtha crack fell for the second day on Thursday to around a 1-1/2 week low of US$156.58/ton as technical correction persisted following rapid, sharp increases recently due to thin supplies. A trader opined that the market was overheated and the crack value was too strong. The naphtha crack, the premium/loss of refining a barrel of Brent crude into the light fuel, peaked to US$190.58/ton on July 15. Brent crude prices were down 5.6% on July 15 compared with July 1, but the open-spec naphtha price was at US$988.50/ton on both dates, causing the crack level to surge, taking some traders by surprise. Usually after winter, petrochemical makers are able to replace some portion of their naphtha with liquefied petroleum gas (LPG). But India lowering its exports in July and Saudi Aramco having participated in tenders for the first time and scooped up nearly 200,000 tons of spot naphtha from the Middle East created a supply void.