Naphtha margins in Asia recover from a 3-1/2 year lows

14-Jun-12

Asia's naphtha margins recovered from a 3-1/2 year low on Monday and surged by about 35% to US$24.28/ton in line with the rise in European margins after a rescue package for Spain boosted sentiments, as per Reuters. Euro zone finance ministers agreed on Saturday to lend Spain up to 100 billion euros (US$125 bln) to shore up its teetering banks, providing relief for markets that have lately been gripped with fear of a potential breakdown of the euro zone. However, traders' agree that Asia's market fundamentals have not improved. Demand was slow as buyers were cautious as they concur that the European crisis is far from over. Weaker demand in the region was clearly reflected in the two spot tenders done out of India where ONGC and BPCL had to sell at lower premiums than before. Supplies from India are on the rise with India's newest refinery, Hindustan Mittal Energy Ltd (HMEL), having offered its first small, 8,000-10,000 ton quantity of naphtha for export around end June loading. ONGC sold 35,000 tons of naphtha to Gunvor for June 29-30 loading from the port of Hazira at US$14/ton premiums to Middle East quotes on a free-on-board (FOB) basis, down by about 36% versus a previous sale, also to Gunvor. BPCL sold 35,000 tons for July 25-27 loading from Mumbai to Unipec at premiums of US$17-18 but did not sell cargo for July 16-18 loading from the same port. Kuwait Petroleum Corp (KPC) has sealed its full-range naphtha for August 2012 to July 2013 lifting with some of its Asian buyers at record premiums of US$24/ton to Middle East quotes on a free-on-board (FOB) basis. Bangladesh will delay the lifting of 170,000 barrels naphtha by two days to July 16-18. The tender closes on June 26 with bids to stay valid until July 2.