Naphtha crack in Asia peaks to a 2-1/2 month high amid rare westbound trades

19-Sep-16

Asia's naphtha crack hit a 2-1/2 month high of US$48.05/ton at the end of the previous week. This increase can be attributed to rare westbound trades, as per Reuters. At least one medium-range size tanker and two long-range 1 (LR1) vessels carrying naphtha of Middle Eastern and Indian origin totalling over 140,000 tons had already landed in Northwest Europe, traders said. More westbound cargoes are expected as at least three more tankers, including Navig8 Excel and BW Shinano were placed on provisional booking for October arrival from Rabigh.

"Light naphtha is suffering in Asia with huge discounts while European premiums are quite solid especially if they can use the grade as a blending component for gasoline", said a Singapore-based industry source. However, naphtha's strength could be capped unless Asia is able to purge a sharply higher amount of cargoes. This however is unlikely as supplies are expected to increase given that Qatar Petroleum, South Korea's Hyundai Oilbank and Taiwan's CPC each have a new condensate splitter, traders said. The bulk of the oil products yield from a condensate splitter is naphtha.

Japan's monthly naphtha imports for the petrochemical sector jumped 10.8% or 110,529 tons to 1.13 million tons in August versus July, official data showed.