The premium of front-month naphtha CFR Japan cargo to CIF Northwest Europe cargoes -- the east/west -- has fallen to $11/mt down $13/mt over the last six weeks, putting pressure on the arbitrage from Europe to Asia, market sources said Tuesday.
"You would imagine that the arbitrage is completely shut," a European naphtha trader said.
The front month East/West spread was heard trading at $11/mt in the European morning Tuesday, a significant fall from July 8 when it was trading around $23/mt.
"The East doesn't need naphtha with the Middle East and India spewing barrels," an Asian naphtha trader said.
