Naphtha prices in Asia fall for fourth consecutive week: halve from early August

18-Oct-08

Naphtha prices in Asia have dropped by over 50%, halving since early August. Cargoes for H1-December loading were pegged at US$443.50-444.50/ton (€328.19-328.93/ton) CFR (cost and freight) Japan as per ICIS pricing. But this does not seem to be the end of woes for Asian petrochemical players, as they fortify themselves for bracing themselves for more drastic price drops as naphtha plummets fro the fourth straight week. A 20% drop in naphtha paper trades compared with September volumes has been witnessed. In fact, deal for 25,000 tons for H2-December loading was heard concluded at US$464/ton CFR Japan. These low levels in naphtha prices have not been witnessed since August 2005. Additional cuts in run rates being mulled by Asian crackers due to feeble derivative demand; and persistently plunging naphtha in line with crude values, has elevated prospects of a further deterioration in polyolefin prices. Derivative demand is expected to decline further as the financial crisis in US and Europe fuels fears of a global recession- impacting export volumes of Asian processors. This in turn will lead to demand in the region getting limper. In the current scenario, naphtha prices have dipped below US$500/ton CFR Asia, ethylene spot prices are below US$800/ton CFR NE Asia. Benzene prices tumbled by US$140/ton in this week, and US$300 in two weeks, plunging prices to US$670-680/ton FOB Korea - levels not seen since March 2006. Toulene prices were assessed at US$610-620/ton FOB Korea and paraxylene dipped to US$810-820/ton CFR Taiwan.