Asia naphtha crack spread at six-week high; demand holds up
Melanie Wee
26-Nov-2019
SINGAPORE (ICIS)–Asia’s naphtha crack spread rose to six-week highs, as steady demand helps to absorb supply, which is expected to be sustained in the near term.
On 25 November, naphtha’s crack spread to prompt-month ICE Brent crude oil futures for January stood at $95.40/tonne, up from week-earlier levels of $73.55/tonne.
The crack spread, a measure of the product’s refining margin, was last seen at above $90/tonne in mid-October.
On Tuesday morning, open-specification naphtha prices were at $573.00/tonne CFR (cost and freight) Japan basis, on par with the previous day’s session and up by some 4% from a week earlier, ICIS data showed.
Naphtha prices tracked global crude oil futures, with ICE Brent crude futures settling higher overnight at $63.65/bbl amid rekindled hopes of China and the US potentially signing an interim deal in resolving the trade war.
Consistent naphtha demand with January cargo spot purchases provided support in soaking up supply.
South Korea’s Hanwha Total Petrochemical secured naphtha cargoes for first-half January delivery, even though premiums have eased from its previous purchase of first-half December shipments.
South Korea’s Yeochun NCC (YNCC) also raked in first-half January delivery spot naphtha at a premium of around $23/tonne to spot CFR Japan quotes.
In the Middle East, spot prices were in part buoyed by market expectations of lesser cargo arrivals this month, supporting prices in the region.
Spot naphtha FOB (free on board) Middle East prices on 25 November were at $518.12/tonne, up 4% from a week earlier, according to ICIS data.
Naphtha’s forward market structure stood at a wide backwardation, with prompt-month first-half January prices $22/tonne higher than first-half February, reflecting firm market fundamentals.
Focus article by Melanie Wee
Photo: A container ship docked at a port in Osaka, Japan. (By Andy Wong/AP/Shutterstock)
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