Naphtha margin in Asia rises for fourth straight session to 8 month high

07-Nov-13

Naphtha margin in Asia rose for a fourth straight session to hit a fresh eight-month high of US$145.13/ton on Monday due to anticipation of strong demand and low Indian supplies, as per Reuters. So far India has sold less than 500,000 tons of naphtha for November lifting, but traders are hoping that more cargoes will be offered once India returns from holidays. Demand is expected to be robust in the short run, with petrochemical companies likely to remain dependent on naphtha feedstock given no cheaper alternatives for now. Liquefied petroleum gas (LPG), which can replace a small portion of naphtha feedstock, usually becomes costlier during winter as it is also needed for heating purposes. Prices of condensates, which yield naphtha among other clean products, are also expected to stay supported in the short term, traders said. Bahrain Petroleum Corp (Bapco) has sold 50,000 tons of naphtha for end-November lifting to Vitol at about US$33/ton above Middle East quotes on a free-on-board (FOB) basis - 18 to 22% higher than a previous sale for an October cargo. Traders said Bapco may have reduced its term offer for 2014 to US$28.50/ton from an initial US$30/ton That level would surpass the US$28 it agreed on 2013 contracts, a record high premium for the refiner so far.