Naphtha in Asia nears 6-month high- spikes past US$600 on strong crude

24-Apr-19

Asia’s naphtha prices breached the US$600/ton mark to their highest in nearly six months, bolstered by strength in global crude oil futures and petrochemical demand, which is set to continue, as per ICIS News. On Tuesday morning, open-specification naphtha prices for first-half June delivery stood at $611.00/tonne CFR (cost & freight) Japan basis, a jump of US$22.50/ton from the close on 18 April, ICIS data showed.

Spot prices are up by about 7% from month-earlier levels. Prompt-month naphtha prices were last seen at levels above US$610/tonne in end-October 2018. At midday, ICE Brent June crude oil futures were up 41 cents at US$74.45/bbl, following an abrupt move by the US to end waivers on Iranian oil purchases. Reflecting the buoyant market sentiment, naphtha’s crack spread to June ICE Brent crude oil futures stood at US$53.68/ton on 22 April, a three-week high, ICIS data showed. Steady downstream end-user petrochemical demand is helping to soak up regional supply.

South Korea’s Hanwha Total Petrochemical was understood to have secured H1-June delivery naphtha at a premium at around US$5/ton to spot CFR Japan quotes for delivery to Daesan. Prior to this, the firm paid a similar premium to spot quotes for H2-May supplies. Other northeast Asian end-users are likely to emerge with fresh H1-June spot requirements. Market sentiment was in part lifted by an expected reduction in western origin deep-sea cargo arrivals. Arbitrage shipments to Asia are estimated to reach around 1.6mln tons this month, down from an average of 2 mln tons in March.