Naphtha prices in Asia peak to highest levels in over a year

Naphtha prices in Asia have crosses US$700, peaking to their highest level in over a year. Open spec naphtha prices are pegged at US$701/ton CFR Japan for H2-December shipment as per ICIS on improved markets. Market conditions have improved at a time when petrochemical production declines on weak seasonal demand. Lackluster demand for styrenics and fibre intermediates has been reported in the last week. What then is pushing up naphtha prices in Asia? Is the Asian petrochemicals industry ramping up production in anticipation of crude gaining strength and estimation of an improvement in the real economy? In its weekly report, the Energy Information Administration (EIA) has disclosed a more than expected rise in US oil and gas supplies last week, despite shutdown of refineries across USA as fuel consumption slumps. US refineries had slowed production to the lowest levels since September 2008 and they were importing nearly 15% less crude than last year. Interestingly, most other comparative numbers are showing improvements. In all likelihood, the new refinery capacities that have come onstream in India and China are exerting pressure on the refineries in the developed world. Refinery runs have been cut globally, except in China, hence reduced supply could be another factor behind the rise in naphtha. The Chinese refineries are enjoying improved profitability as a result of the fuel-price liberalization.
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