Naphtha prices in Asia dip to two-week lows

03-Aug-11

Naphtha prices in Asia dropped to two-week lows on Tuesday with cracks slipping to a four-session low, as per Reuters. However, spot prices were higher in South Korea although still at discount levels. While supplies of heavy grades used for aromatics production continue to remain tight, it is reverse for open-spec grades, used mainly to produce ethylene. At present, the naphtha market is now driven by demand from aromatics plants, Samsung Total bought 25,000 tons of open-spec grade naphtha for H1-September arrival at minus 50 cents/ton to Japan spot quotes on a cost-and-freight (C&F) basis. This was higher than the 100,000 tons YNCC bought last Friday at minus US$1/ton. Market outlook remains unclear. Players opine that the market could have over-reacted to the reversed arbitrage done earlier. Though the shutdowns at Formosa should be a bearish factor, many, the situation remains uncertain in Taiwan. Strength in Europe is supported by gasoline blending, and it is expected to wane after the U.S. summer driving season is over. The price forfront-month open spec naphtha for H2-September fell by US$23 to US$990/ton, lowest since July 19.