SINGAPORE: Asia is expected to see at least a 25% jump in western naphtha supplies in July, mainly from a near doubling of volumes from the Americas, according to estimates from three Singapore-based traders and Refinitiv.
Traders have boosted western naphtha shipments expecting higher demand from Asia as three new crackers in South Korea and China are starting operations in June and July.
The volume of naphtha arriving in Asia from the West is estimated at 2.5-2.6 million tonnes in July, up from about 2 million tonnes in June, according to the traders and Refinitiv analyst Krystal Chung. Asia typically receives about 2 million tonnes of western naphtha each month.
Supply from the Americas, mainly exports from the US gulf coast, could nearly double to just under 1 million tonnes in July from June.
“Arbitrage volume is increasing in particular from the US,” one of the traders said, adding that supplies from within Asia is also rising as refiners have increased output slightly.
While the bulk of US supplies is light naphtha, shipments of the heavy full range grade are rising, the sources said.
Global trader Vitol has put a suezmax tanker on provisional charter to load 120,000 tonnes of naphtha from Amsterdam-Rotterdam-Antwerp to Japan later this month, shipping data on Refinitiv showed. Typically, naphtha is shipped in smaller cargoes of 30,000 to 60,000 tonnes.
Refinitiv’s Chung said the last such shipment on a suezmax arrived in Asia in March.
However, the expected supply surge and weaker margins for cracker operators over the past weeks have depressed Asia’s naphtha markets.
Petrochemical producers’ margins for ethylene, a plastic raw material, have fallen under $300 per tonne, from more than $500 a few weeks ago, the second trader said.
“Crude oil prices have increased so much that petrochemicals can’t catch up... There is a concern that we might see cracker run cuts next month.”
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