Naphtha crack in Asia rises to 3 session highs on strong fundamentals led by seasonal factors

18-Nov-16

Naphtha crack in Asia ended three consecutive days of losses, rising to a three-session high of US$80.60/ton on Thursday, as strong fundamentals led by seasonal factors reversed the tide, as per Reuters. Traders said fewer naphtha cargoes typically come to Asia during winter as petrochemical makers in the west turn to naphtha when liquefied petroleum gas (LPG) becomes less widely available as a raw material due to heating demand. Supplies are expected to be plentiful due to new refining capacities and new condensate splitters. India's Bharat Petroleum Corp Ltd (BPCL) is expected to increase its naphtha spot supply once it completes the expansion of its Kochi refinery in 2017.

Expectations of a well-supplied market ahead were the key reason behind 2017 deals being sealed at lower premiums compared with 2016 contracts between Middle Eastern heavy weight suppliers and Asian customers.