Story
Asian Naphtha Prices Fall for Third Day on Weaker Crude Oil
Summary
Naphtha prices in Asia declined for the third consecutive session, pressured by a downturn in benchmark crude oil markets. The key refining margin, or crack spread, also narrowed despite signs of persistent supply tightness.
Asian naphtha prices fell for a third consecutive session on Friday, primarily dragged down by weakness in the broader crude oil benchmarks as concerns over supply disruptions eased.
Price Action
Prices for naphtha scheduled for first-half November delivery saw a significant drop, tracking the downturn in the energy complex. According to market participants, the key figures were:
- Naphtha price: Fell by $18 to $924.75 per metric ton.
- Naphtha-Brent crack spread: Narrowed by approximately $8 to $151.95 per ton, indicating lower refining profitability for the petrochemical feedstock.
Despite the price drop, the market structure known as backwardation remained pronounced at $28.75 per ton. This condition, where prompt prices are higher than those for future delivery, typically signals persistent concerns about near-term supply availability.
AdMarket Drivers
The primary pressure on naphtha came from the crude oil market, where prices also recorded a third straight day of declines. Traders noted that fears of a supply disruption from Saudi Arabia have subsided, outweighing the geopolitical tensions stemming from wider conflict in the Middle East.
On the supply side, Thai petrochemical producer Rayong Olefins restarted its naphtha-based cracker on Thursday. The development was confirmed in a stock exchange filing by its parent company, SCG Chemicals. The plant had previously been shut down under a force majeure declaration in March due to regional conflicts.
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