Naphtha margins in Asia likely to turn negative in H2 on increased exports from Iran

11-Mar-16

Asian refiners could see their margins for producing naphtha, turning negative in the second half of this year as Iran increases exports, as per an industry analyst in Reuters. Iran is expected to increase naphtha exports once they start operating new condensate splitters, said Tushar Bansal, who heads East of Suez research at FGE. "They start up around the middle of the year, but the reformers, which are attached to these units to produce gasoline, are not due to come onstream until another six months' time," Bansal said at the Thomson Reuters Asia Petroleum Lunch, adding that naphtha is going into a period of see-saw. "In the second half of this year, naphtha cracks would dip into negative territory and then next year, they'll go back into the positive territory." Rising demand in Asia pushed naphtha margin NAF-SIN-CRK to a near two-year high in January, according to Reuters data, but it has since tumbled to the lowest in more than six months on a surge in arbitrage supply.