Home / Energy/ Asian refiners face high volumes of Western naphtha

Asian refiners face high volumes of Western naphtha


Comments / {{hitsCtrl.values.hits}} Views / Monday, 8 January 2018 00:00


  • Naphtha imports from the West at highest in two years
  • High volumes push naphtha cracks from 22-month highs
  • Q1 cracks unlikely to return to late 2017 peaks- analysts

SINGAPORE (Reuters): Asia is set to receive up to 2.0 million tonnes of naphtha from the West this month, the highest amount in two years, putting pressure on light fuel margins that touched 22-month highs in November.

High refinery runs and a lack of demand for naphtha as a gasoline blendstock over the colder, wetter winter months in Europe and the United States have resulted in unused naphtha, traders said.

Some 1.9 million to 2.0 million tonnes of naphtha – the key feedstock for petrochemicals such as plastics and polyester – was booked to arrive in Asia in January, traders said, the highest monthly Western volume since January 2016.

Asia, being structurally short of naphtha, is an attractive sales outlet for surplus Western supplies.

But the volumes due from the West are way above 2017’s average monthly arrivals of 1.2 million tonnes, with spot premiums around November/December pushing to their highest since 2015.

The high arrivals have dragged Asia’s naphtha crack to a 2-1/2 month low of $104.95 a tonne on Thursday, down from a 22-month high of nearly $135 a tonne on Nov. 13.

“1.9 million tonnes from the West seems high to me as we have not seen that level for a long time,” said Premasish Das of IHS Markit.

“If you look at the high gasoline inventories in Europe and the US along with weaker seasonal demand, it is unlikely that naphtha exports will reduce in February/March,” he added.

Some trade and industry sources expect the weakness in the naphtha crack to pass as supplies could be soaked up by strong demand, especially due to a lack of cheap liquefied petroleum gas (LPG), used as an alternative feedstock. LPG, also used for heating, usually becomes more readily available in summer.

But they added that naphtha crack levels in the first quarter were unlikely to return to the peak levels seen in late 2017.

“Naphtha demand is set to remain strong in light of supportive steam cracking margins, and seasonal maintenance is not expected to constrain steam cracker run rates until the end of Q1,” said Andrada Irimie of consulting firm JBC Energy.

“Weaker LPG prices could offer some pressure to naphtha cracks, placing a ceiling on cracks which means they are unlikely to reach and sustain their early-December crack levels again over the next few months.” 

IHS Markit’s Das said he did not expect very high cracks in February/March.

“If the crude price stays high, that would be the other impediment,” he added, with naphtha priced off Brent.


Share This Article


DISCLAIMER:

1. All comments will be moderated by the Daily FT Web Editor.

2. Comments that are abusive, obscene, incendiary, defamatory or irrelevant will not be published.

3. We may remove hyperlinks within comments.

4. Kindly use a genuine email ID and provide your name.

5. Spamming the comments section under different user names may result in being blacklisted.

COMMENTS

Today's Columnists

Singapore miracle – How SL could benefit from trade with Singapore

Monday, 20 August 2018

According to a media report released by President’s Media Division, a committee of experts has been appointed by the President to examine and report on ‘the practical impact and use of the proposed officer policy guidelines and recommendations on


High NPAs in SME sector: Who is responsible?

Monday, 20 August 2018

Non-Performing Assets (NPAs) of the banking sector have been increasing in the recent past. Gross NPA ratio reached about 3.3% as at end of May2018 recording an increase of about 0.8% over the past five months.


DMK Chief “Kalaignar” Karunanidhi excelled as a Tamil film script writer

Saturday, 18 August 2018

Muttuvel Karunanidhi, known to the Tamil-speaking world as “Kalaignar” (artiste), passed away at the age of 94 in Chennai on 7 August. Karunanidhi had been Chief Minister of India’s Tamil Nadu state for a total of 19 years. He was Chief Ministe


Bangladesh could be a happy hunting ground for Lankan entrepreneurs

Saturday, 18 August 2018

Bangladesh has traditionally been hospitable to Sri Lankan entrepreneurs and fortunately, the traditional friendliness has not given way to arrogance with the country’s growing prosperity. This was acknowledged at a meeting of Sri Lankan entreprene


Columnists More