Asia naphtha crack jumps to 2-week high on supply concerns

SINGAPORE: Asia’s naphtha crack climbed to a near two-week high on Friday amid emerging concerns over arbitrage supply disruptions caused by the blockage in the Suez Canal. The naphtha crack jumped to $108.90 per tonne on Friday, the highest since March 15 and up from $100.15 per tonne a day earlier.

“Around 20% of Asia’s naphtha is supplied by the Mediterranean and Black Sea via the Suez Canal,” said Sri Paravaikkarasu, director for Asia oil at FGE, adding that re-routing ships around the Cape of Good Hope could pile about two more weeks to the voyage time.

“Global naphtha prices have risen since the blockage occurred with the east-west spread widening by nearly $2 per tonne as salvage efforts get prolonged,” Energy Aspects said in a note to clients on Thursday.

“While Middle East-Northeast Asia freight rates have risen mildly, Asian naphtha prices have done the bulk of the work to keep the arbitrage open, gaining about $10 per tonne since the blockage occurred. The east-west spread could easily return to winter highs of $18-19 per tonne should the waterway remain blocked for weeks,” the research consultancy said.

By contrast, Asia’s gasoline crack slipped on Friday, weighed down by concerns about the impact on demand of extended lockdowns in Europe and disruptions to the distribution of coronavirus vaccines.

The gasoline crack in Singapore slipped to $5.81 a barrel, down from a near two-week high of $5.98 per barrel on Thursday.

Gasoline stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub rose 2% to a seven-month high of 1.414 million tonnes in the week to March 25, data from Dutch consultancy Insights Global showed. Naphtha inventories in ARA rose 9% to a three-week high of 328,000 tonnes, the data showed.