Naphtha Market Asia's Naphtha Market to Tighten Towards the End of 2013

Editor: Dominik Stephan

Asia's naphta market could be facing a period of tighter supplies, as it recieves less naphtha from Western arbitrage flows. This impact could be felt from November on, as by then surplus arbitrage cargoes from the summer months will be consumed, a recent report by Platts indicates...

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Naphtha prices in Asia could rise, as less arbitrage flows in from Western markets...
Naphtha prices in Asia could rise, as less arbitrage flows in from Western markets...
(Picture: PROCESS)

The study estimates that some 500,000 to 600,000 tons of naphtha from Western arbitrage flows would be shipped to Asia in October 2013, significantly less than the estimated monthly average of 1.1 million in August. With several European refineries scheduled for turnarounds in fall 2013, and low margins for western refiners a change of trend is unlikely.

As two major naphtha-fed petrochemical facilities (Formosa in hailand and GS Caltex in South Korea) will be back on stream after revamps in winter, demand in Asia will surely pick up, the analysts predict. The unceretain status of naphtha exports from India and the Middle east might, neverthless, still change the face of the market. Should these regions take over the supply, price increaes are much less likely.

Still, Asian naphtha prices have generally been on an uptrend since the beginning of September, with the benchmark Mean of Platts CFR Japan naphtha flat price assessment hitting a more six-month high of $970.75/mt on September 9, 2013. The MOPJ naphtha flat price was last higher on February 28, 2013, when it was assessed at $973/mt, Platts data showed.

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