Naphtha market in Asia embarked on its worst ever slump with demand deterioration in line with the global economic meltdown. In a bid to cope with lackluster demand several cracker operators reduced run rates.
Spot cargoes traded at a premium for the first time since July, indicating a revival in naphtha markets of Asia, as per Platts. After its worst slump, spot cargoes traded at a premium and a European arbitrage re-opened after 3 months. Open-spec naphtha is commanding a premium of US$5-6/ton as against the US$40/ton discount in October.
Several players estimate that a revival in prices has been caused by South Korean cracker operators who have increased ethylene production to take advantage by increasing supplies in the face of lower ethylene exports from Iran. South Korean players have augmented output for December to 85% of nameplate capacity of around 7.3 mln tpa. This demand revival has been coupled with reduced naphtha exports from India because of stronger domestic demand. Exports from India are estimated to remain below 500,000 tons from December-February as compared to a healthier figure of 700,000-730,000 tons in November. Also, currently demand from China has improved before the country embarks on its more than week long Lunar Holidays. These factors indicate that the demand recovery could be short term, specially since the global economic meltdown is expected to worsen in 2009.
30-Dec-08 
{{comment.DateTimeStampDisplay}}
{{comment.Comments}}