Petrotahlil - Asia naphtha prices spiraled lower as crude oil markets weakened on concerns of a slowdown in global demand stemming from the coronavirus spread.
On Thursday morning, naphtha prices averaged at around $447/tonne CFR (cost and freight) Japan for first-half April delivery, down by more than $15.25/tonne or 3% from the previous day’s Asia close.
Prices have fallen by $60.50/tonne from a week ago, sending them to their lowest since July 2017, ICIS data shows.
At midday, April ICE Brent crude oil futures declined 78 cents to $52.65/bbl following new cases of the coronavirus across the world, raising fears that energy demand would fall.
Frail demand for petrochemical production has dampened naphtha consumption, with northeast Asia end-users taking in less spot supplies while cargo premiums softened.
South Korea’s Yeochun NCC paid a premium of around $10.50/tonne to spot CFR Japan quotes for first-half April naphtha, down from nearly $19/tonne premium it paid for second-half March supplies.
Also reflecting the bearish market sentiment in the region, Taiwan’s Formosa Petrochemical (FPCC) secured just around 30,000 tonnes of second-half March naphtha, much lower than its average monthly intake of about 100,000 tonnes.
FPCC also paid a lower premium for the supply compared with its earlier purchase.
Naphtha’s crack spread at the close of Asia trade on 26 February sank to a five-month low $54.49/tonne, down from the previous session’s $52.55/tonne.
The crack spread is a measure of its refining margin.
Cracker turnarounds in Asia are crimping demand for the feedstock.
Taiwan’s CPC is carrying out scheduled maintenance at its No 3 cracker, and was in the market to export naphtha for March loading from Kaohsiung as part of efforts to divert surplus supply.
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Source : ICIS