Two week low front-month naphtha cracks as supplies rise

03-Jun-14

Naphtha crack in Asia for front-month H2-July dipped to US$129.6/ton, making this the lowest front-month value in about two weeks as supplies were seen rising, as per traders in Reuters. India's June exports rose above 600,000 tons after volumes were kept below 500,000 tons for May and April each as some refineries had returned from maintenance but were met with lacklustre gasoline demand. As naphtha can be reformed into gasoline or be used as a motor fuel blendstock, refiners will decide whether to export naphtha or chanel it into the gasoline pool. "But gasoline margins are not great and naphtha exports are seen higher," said a Singapore-based source. Unlike last week, strong gasoline demand in West Africa drawing away European naphtha cargoes from Asia could no longer lift the naphtha market, given that there was no acute shortages in the East, traders said. Adding to bearishness was the Philippines' JG Summit Petrochemical Corp having to defer delivery dates of a 30,000 ton naphtha cargo to H1-July from H2-June due to delays in starting up the country's first naphtha cracker. Although the cargo size was small, traders said almost any news against sellers will weigh on sentiment. The weaker market worked in favour of Malaysia-based Titan who was seeking a cargo for H1-July arrival at Pasir Gudang.