Naphtha in Asia expected to fall amid crude declines, economic uncertainty, oversupply

09-Dec-14

Naphtha prices in Asia are expected to decline further in tandem with global crude futures, amid uncertainties in the global economy and an oversupply of the petrochemical feedstock, as per traders in ICIS. Open-spec H2-January prices fell to US$570.50-573.50/ton CFR (cost and freight) Japan, dragged down by lower crude futures. Prices had tumbled from level of slightly over US$900/ton seen in early September, underscoring the weakness in the market, data indicated. Asia’s naphtha market has been dogged by surplus cargo availability, with demand and supply situation totally unbalanced, as per traders. Arbitrage inflows of naphtha into Asia from from Europe, the Mediterranean and the US in December are forecast to total around 1.8 mln tons, and January arbitrage inflows to Asia are expected at close to 2 ml tons. Demand for naphtha from the petrochemical sector remained reasonably strong buoyed by continued high cracker run rates in the Asia-Pacific region. However, Chinese buyers had cut back on naphtha purchases compared with previous months, the traders said.