Naphtha in Asia falls at start of week amid weaker crude and increased supplies

03-May-13

Naphtha prices in Asia reversed gains to dip to a two session low of US$858.5/ton at the start of the week, amid weaker Brent crude. Naphtha margins dipped to a two-session low of US$85.85/ton due to ample supplies, as per Reuters. The region is expected to see an increase in supplies. May exports from India are expected to jump nearly 21% to a four-month high of 700,000 tons after six-month low April export figures of 580,000 tons. India has already sold up to 470,000 tons of naphtha for May lifting and has outstanding tenders for another 125,000 tons which are due to be awarded this week. This is coupled with higher volumes of European exports to Asia to the tune of 900,000 to 1 mln tons a month since the start of the year- over 60% higher than 2012's monthly average. Although average premiums for May cargoes have fallen nearly 33% to US$37/ton on a free-on-board (FOB) basis versus an average of US$55/ton for cargoes lifted in March from India, traders said current levels were above market expectations. Traders who were caught short of supplies were willing to pay more to secure cargoes as they need to fulfill their obligations to their customers.