Asia's naphtha front-month price stayed lower than the following month's value for the sixth straight session on Thursday, a reflection of a weak market caused by a supply glut. Front-month first-half September price was 50 cents a tonne lower than first-half October's value at $495.50 a tonne, or a market in contango in industry's term.
Sellers were grappling with high volumes of cargoes coming in from the west and were bracing themselves for further cuts in spot prices which were already at discount levels on a cost-and-freight (C&F) basis for more than a week. Traders said the weak fundamentals were a result of too much naphtha supply. Demand has been healthy as naphtha crackers were mostly operating at maximum run rates to take advantage of strong petrochemical margins.
GASOLINE STOCKS HIGHER Gasoline stocks were higher in Singapore, with its onshore light distillates stocks, which comprise mostly gasoline and gasoline blendstocks, having risen nearly 13 percent, or 1.374 million barrels to 12.052 million barrels in the week to July 15, official data showed. The volumes of gasoline blendstocks that arrived in Singapore over a 7-day period ending Wednesday reached around 238,000 tonnes.
These were more than double the volumes that arrived in Singapore in 6-day period ended July 7 at around 112,000 tonnes. Last week's official data did not include July 8 volumes. "Traders may have overbought naphtha as blendstocks to be used in gasoline," said a Singapore-based trader, explaining the slowdown in demand for naphtha.
Naphtha, depending on its grade, can be processed into petrochemicals or be used as a blending component in gasoline. Qatar's Tasweeq has likely sold up to 100,000 tonnes of naphtha for August 15-31 loading from Ras Laffan. The results were not known but traders estimated the premium levels to be within $7 to $8 a tonne to Middle East quotes on a free-on-board (FOB) basis. India's Oil & Natural Gas Corp (ONGC) offered 34,500 tonnes of naphtha for August 8-9 loading from Hazira through a tender closing on July 20.
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