| RSS
Business center
Office
Post trade leads
Post
Rank promotion
Ranking
 
You are at: Home » News » internal »

Asian naphtha market may firm on less arbitrage flows, year-end demand: traders

Increase font size  Decrease font size Date:2013-09-27   Views:607
The Asian naphtha market may firm going into the last two months of this year on curtailed arbitrage flows which will likely tighten supply balances and year-end demand mopping up excess naphtha supply from the higher arbitrage arrivals in August and September, Asian trade sources said Monday.

Market sources estimated that Asia will receive around 500,000-600,000 mt of naphtha from Western arbitrage flows in October, significantly less than the estimated monthly average of 1.1 million mt in August and September.

But despite lower volumes of arbitrage supply arriving in October, traders said the market may only feel the impact of the reduced supply from the November delivery period, as surplus arbitrage cargoes from September that cannot be absorbed will likely be rolled over into October.

They estimated around 500,000 mt of surplus naphtha will be rolled into October, bringing total arbitrage volumes for October to up to 1.1 million mt.

While there is no clarity as yet on incoming arbitrage volumes for November and December, traders said they expect arbitrage volumes over the two months to be lower compared with previous months.

"The North Asia H1 November (first-half November) delivery period will definitely be stronger than H2 October. Arbitrage volumes will be a lot less due to refinery turnarounds in Europe over September and October, and run cuts in Europe and the Mediterranean due to poor refining margins," a Singapore-based trader said.

Algeria's state-owned Sonatrach for one, is expected to shut the 5 million mt/year condensate splitter at its 16.5 million mt/year refinery at Skikda for scheduled maintenance from mid-September to mid-October, Platts reported previously.

The Skikda refinery is a major naphtha exporter and part of the structural arbitrage to Asia. Sonatrach typically exports six to seven 30,000-35,000 mt naphtha cargoes each month from its condensate splitter, in addition to six to seven cargoes from the refinery.

"By then, Taiwan's Formosa [naphtha-fed steam] cracker will be back from turnaround, and so will South Korean GS Caltex's naphtha splitter, so demand for naphtha in Asia will pick up," the same trader added.

Adding to this, traders said year-end seasonal demand for naphtha will likely lend some support to the market. These include unworkable economics to use LPG as an alternative cracking feedstock to naphtha, as well as peak demand season for ethylene in plastics production ahead of the Christmas and Lunar New Year holidays.

HIGHER INDIAN, MIDEAST GULF SUPPLY IN OCT

But some traders disagreed, saying plentiful supplies may still characterize the Asian naphtha market.

"I don't think November will be strong -- with the 1.1 million mt of naphtha we have for October, those barrels may have to be rolled over into November as well -- and we still don't have clarity on Western arbitrage volumes for November arrival into Asia yet," another trader said.

In addition, market participants pointed out naphtha exports from India and the Middle East still have to be factored into the overall supply picture. Trading sources said last week that volumes from India and the Middle East are expected to hover at around 800,000 mt and 3.2 million mt for September and October loading, respectively.

"There's a lot of supply coming in, so unless there's a reduction, I don't think November will be particularly strong," a trader said. "I don't see why there should be a reduction in supply [from India and the Middle East] though," the source said.

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.

Asian naphtha cracks have also been on the uptrend over September. At the Asian close Monday, the MOPJ H2 November naphtha crack versus November ICE Brent futures stood at $124.48/mt, its highest in more than six months. The crack was last higher on March 1, 2013, when it stood at $130.50/mt.

Cargo activity during the Asian naphtha Platts Market On Close assessment process has also been proceeding at a quick pace. For September to date, 26 trades were reported concluded on the MOC. For the whole of August, the Asian MOC saw a total of 34 trades, the highest number of trades concluded in a month for this year so far.

Some of the most active trading participants in the Asian naphtha MOC for September were Glencore and Sietco. Glencore has been a counterparty on a total of 19 trades so far, mostly on the selling side, while Sietco has been a counterparty on a total of 14 trades, mostly as a buyer. For trades concluded on the MOC during August, Glencore and Sietco were mostly on the selling side, with Glencore concluding a total of 26 trades, and Sietco with seven.
 
 
[ Search ]  [ ]  [ Email ]  [ Print ]  [ Close ]  [ Top ]

 
Total:0comment(s) [View All]  Related comment

 
Recomment
Popular
 
 
Home | About | Service | copyright | agreement | contact | about | SiteMap | Links | GuestBook | Ads service | 京ICP 68975478-1
Tel:+86-10-68645975           Fax:+86-10-68645973
E-mail:yaoshang68@163.com     QQ:1483838028