SINGAPORE: Asia naphtha cracks and prices were slightly firmer despite mixed buying interest across the board, amid rising oil futures in the afternoon trading session on Tuesday.
Open market deals for naphtha have been absent since end-April, Reuters records showed.
Buying interest for the cracker feedstock was mixed as downstream petrochemicals demand stayed tepid especially from the plastics and fibres sectors but production spreads for crackers improved from a few weeks ago. Several Asian crackers are still mulling run rate increases given the better production spreads despite some weakness in ethylene prices from a week earlier, one trader said, which may boost some July demand although the ultimate decision could still be pending the pace of downstream sales.
Talks of at least two South Korean crackers ramping up their unit runs were heard since a week earlier, with spot requirements to emerge for second-half July deliveries to emerge soon.
A portion of the market is still expected to gradually use more LPG as a feedstock because of the better economics, especially compared with sanctioned naphtha price discussion levels.
Separately, some integrated crackers could still maintain their proportion of naphtha feed as its usage in the gasoline blending pool may be minimal given that major refiners had already stocked up beforehand, though the reforming margins remained at an economical level of $25 a barrel.
Gasoline trading activity stayed muted in Asia on the back of limited regional demand, with cracks falling slightly to $12.10 a barrel.
Even though an opened arbitrage window remained, some Asian sellers were finding it risky to offload parcels to the West because of the arrival time lag and a steep backwardation in prompt and forward prices.
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