Asia's naphtha crack was near a three-week high of $125.30 a tonne on Friday, bringing 2017's average crack level to $87.60 a tonne, higher versus 2016 but lower when compared to 2015. This year's crack value was dragged down between May and July because of an oversupply but the tide changed due to a combination of factors that gradually affected naphtha supplies and pushed the crack levels to 22-month highs in October.
The factors included outages in Shell's Pernis refinery in the Netherlands which started around end July, followed by the hurricane season in the US in August and a prolonged lack of cheap alternative liquefied petroleum gas (LPG) feedstock. Buyers have mostly wrapped up buying cargoes for first-half February 2018 delivery and they will start buying for second-half February delivery in early 2018.
Strong demand for naphtha, which is the key feedstock for petrochemicals such as plastics, polyester and many more, is expected to keep February spot premiums at firm levels, traders said. Although spot premiums this month have mostly came off levels not seen since 2015, they remained at levels of mostly above $10 a tonne to Japan quotes on a cost-and-freight (C&F) basis versus discount levels a year ago. Asia's gasoline crack ended the week at a three-session high of $8.04 a barrel, bringing the average crack value for 2017 to $10.55 a barrel.
Similar to naphtha, gasoline's 2017 average crack value was higher than 2016 but lower than 2015. High Chinese gasoline exports and a push to use non-fossil vehicles will remain key concerns for sellers in the long run.
Gasoline stocks held in the Amsterdam-Rotterdam-Antwerp (ARA) storage and refining hub edged up 2.5 percent to a two-week high of 854,000 tonnes in the week to December 28, data from Dutch consultancy PJK International showed.
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