Naphtha cracks in Asis recovered by over 5% to US$67.7/ton, at the end of the previous week, following stronger spot demand this week, as per Reuters. However, the value was only about half of what it was a month ago as high stockpiles persisted. Healthy demand for gasoline failed to lift naphtha this time around, unlike the June/July season. "Despite the strong reforming margin, demand from the gasoline sector for naphtha is thin," said a Singapore-based source.
Naphtha can be reformed into gasoline or be used as a gasoline blend stock while the reforming margin, which was above US$19 on Friday, refers to gasoline premiums against naphtha. Refiners take their cue from the reforming margin to decide if they should process heavy naphtha into motor fuel. That typically happens when the reforming margin is above US$13 a barrel. Firm demand from Indonesia due to Pertamina shutting some secondary units at its Balikpapan and Cilacap plants last month for maintenance had kept the Asian gasoline market strong. But Indonesia, Asia's top gasoline importer, could see a sharp increase in gasoline prices as its new President Joko Widodo proposed to raise the fuel price by 46% possibly as early as November 1. This move will save the government nearly US$13 billion next year.
20-Oct-14 
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