Asia Naphtha/Gasoline-Naphtha margins snap gains

Tuesday, 2 Oct 2012 | 7:15 AM ET

SINGAPORE, Oct 2 (Reuters) - The Asian naphtha price extended losses on Tuesday to reach a three-session low of $966 while margins snapped four sessions of gains and fell to $124.95 a tonne as squeezed petrochemical margins overshadowed the firm gasoline prices in the West.

Naphtha can be reformed into gasoline or be blended with the automobile fuel. Firm gasoline prices in Europe and the U.S. were the main reason holding up the naphtha market as that meant less naphtha left for exports to Asia.

But concerns over slower global economic activity were starting to build again as petrochemical makers could be hit if manufacturing for consumer and industrial goods fall.

"Petrochemical makers are paying higher premiums that they should for naphtha feedstock," said a Singapore-based trader.

Petrochemicals, made mostly from naphtha in Asia, are used to make plastics among many other products such as polyester and synthetic rubber.

Although U.S. manufacturing unexpectedly grew last month for the first time since May, euro zone factories suffered their worst quarter since early 2009 and China lost steam.

"There was no good explanation for the strong naphtha cracks other than the firm gasoline prices in the U.S.," said another Singapore-based trader.

Shrinking refining throughput and strong gasoline demand in West Africa were supporting European naphtha prices while in the U.S. a major plant operated by Chevron in Richmond, California, has remained offline following a fire in early August.

A note by BNP Paribas had recently said that the forward winter Reformulated Blendstock for Oxygenate Blending (RBOB) cracks were seen as too high given the fundamentals.


Asia's gasoline margins fell for the first time in about a week. The margins dived nearly 13 percent to $11.16 a barrel from the previous session as effects of Indonesia's firm demand for October cargoes, due to an upcoming maintenance at a secondary unit late this month, started to wane.

Pertamina will shut a unit which removes metals from residue oil at its 125,000 barrels per day (bpd) Balongan refinery for 45 days.

Residue oil, or fuel oil, is used as feedstock in a gasoline-making unit.

* NAPHTHA TENDERS: India's HPCL has sold 25,000-27,000 tonnes of naphtha for Oct. 17-22 loading from Mumbai to Shell at premiums of $22-$23 a tonne to Middle East quotes on a free-on-board (FOB) basis.

- Russia's Rosneft has offered a total of 2.16 million tonnes of naphtha for November 2012 to April 2013 loading from Nakhodka, Vanino and Tuapse.

- It had previously sold 600,000 tonnes of naphtha for November 2011 to April 2012 from Nakhodka at premiums of about $9.00 a tonne to Japan quotes on a FOB basis.

- Cargoes from Nakhodka are usually exported to Asia because of the port being nearer to the East.

- Rosneft currently has a six-month contract which expires this month with buyer BP for cargoes lifting from Nakhodka at premiums of $19-$20 a tonne.

* SINGAPORE CASH DEALS: Only one deal, with Marubeni having bought a first-half December naphtha cargo from Glencore at $959 a tonne. LIGHT DISTILLATES CASH ($/T) ASIA Change % Change Prev RIC CLOSE Close OSN Naphtha CFR Japan M1 966.00 -7.00 -0.72 973.00 OSN Naphtha CFR Japan M2 953.00 -7.00 -0.73 960.00 OSN Naphtha Diff 13.00 0.00 0.00 13.00 Naphtha Netback FOB Sing 104.96 -0.78 -0.74 105.74 Naphtha Diff FOB Sing 1.61 -0.08 -4.73 1.69 Naphtha-Brent Crack 124.95 -9.48 -7.05 134.43 Gasoline 97 130.94 -1.36 -1.03 132.30 Gasoline 95 127.38 -1.63 -1.26 129.01 Gasoline 92 123.30 -1.30 -1.04 124.60 Gasoline crack 11.16 -1.63 -12.74 12.79 SWAPS ($/T) ASIA Change % Change Prev RIC CLOSE Close (0830 GMT) Brent M1 112.14 0.33 0.30 111.81 Naphtha CFR Japan M1 955.00 6.00 0.63 949.00 Naphtha CFR Japan M1/M2 10.00 -1.00 -9.09 11.00 Naphtha CFR Japan M2 945.00 7.00 0.75 938.00 Naphtha Japan-Sing Netback M1 12.70 13.20 -2640.00 -0.50 Naphtha Japan-Sing Netback M2 14.85 14.20 2184.62 0.65 Naphtha FOB Sing M1 104.70 -0.80 -0.76 105.50 Naphtha FOB Sing M1/M2 1.35 0.00 0.00 1.35 Naphtha FOB Sing M2 103.35 -0.80 -0.77 104.15 Naphtha Cracks M1 -7.14 0.45 -5.93 -7.59 East-West Naphtha M1 2.50 -2.50 -50.00 5.00 East-West Naphtha M2 10.00 -1.75 -14.89 11.75 NWE Naphtha M1 952.50 8.50 0.90 944.00 NWE Naphtha M1/M2 17.50 -0.25 -1.41 17.75 NWE Naphtha M2 935.00 8.75 0.94 926.25 Crack NWE Naphtha-Brent M1 -8.25 0.64 -7.20 -8.89 Crack NWE Naphtha-Brent M2 -8.77 0.60 -6.40 -9.37 *Sing refers to Singapore

(Reporting by Seng Li Peng, editing by William Hardy)

((lipeng.seng@thomsonreuters.com)(+65 6870 3086)(Reuters Messaging: lipeng.seng.reuters.com@reuters.net))