Asian naphtha that was fetching a premium of US$130-140 last month, due to severe deterioration in demand - has seen an extreme fall in its spread against Dubai, (crack spread), to a discount less than US$7/ton. With this, it has recorded discounts for the first time since 2001. In fact, a South Korean major has bought a naphtha cargo at a discount of US$45/ton to Japan spot quotes for delivery in H2-November or H1-December.
Asian petrochemical makers will shortly be faced with fresh problems. A downturn, expected to last for atleast 3-4 years is expected to be ushered by swelling supplies of ethylene from more efficient ethane-based Middle Eastern crackers.