Rising demand amid fuel shortage in China propels naphtha to 2 year highs: threefold increase in shipments from Europe

As demand for petrochemicals in China soars amid fuel shortage, naphtha prices in Asia have peaked to two year highs, spurring an almost threefold increase in shipments from Europe. Asia-bound cargoes of naphtha may rise to 290,000 tons this month from 110,000 tons in October, according to the median estimate of four European traders surveyed by Bloomberg. Naphtha delivered to Japan rose to US$817.25/ton on Nov. 11, the highest since September 2008. China’s production of ethylene soared 32% in October to 1.3 million tons. Petrochemicals producers in Japan, Taiwan and South Korea are also running near full capacity. The region is expected to be net short of naphtha in the next two months. Demand for naphtha is rising as industrial output rose 13% in October 2010 vs October 2009, even as the government moved to cut energy consumption by compelling factories to use diesel to power generators, prompting refiners to increase production of diesel at the cost of naphtha. South Korea will add about 450,000 tpa of ethylene capacity by mid-2011.
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