Naphtha cracks in Asia at nine month highs

Asia naphtha crack soared to their highest level in over nine months on limited supply of lighter grades. The supply of light grades has tightened due to refinery maintenance in the Middle East and lower arbitrage inflows, as per Reuters. At the same time, demand from North Asian cracker operators remains firm. LG Chem made purchases of about 25,000 tons (via tender) of open-spec naphtha at a premium of US$10/ton above Japan spot quotes on a cost-and-freight (C&F) basis, up from US$6/ton last week. Market sentiments have been boosted by the restart of Formosa’s 1.03 mln tpa cracker, albeit at reduced capacity. On the supply side, Middle Eastern supplies have fallen. Also, arbitrage flows from Europe have dwindled to about 100,000 tons fixed to arrive in January, down from 500,000 tons, as high freight rates curb arbitrage flow from Europe.
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