Asian Naphtha Prices Fall for Third Day, Tracking Weaker Crude Oil

Asian naphtha prices extended their decline into a third consecutive session on Friday, following a broader downturn in crude oil markets despite signs of tight regional supply.

Price Action

The price for first-half November delivery naphtha fell by $18 to settle at $924.75 per metric ton. This move reflects the pressure from the product's primary input cost, crude oil.

Reflecting the weaker sentiment, the naphtha crack—a key measure of the product's refining margin over Brent crude—declined by approximately $8 to $151.95 per ton, according to market participants. This indicates that profitability for producing naphtha has decreased.

Underlying Market Dynamics

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The primary driver for the drop was weakness in global oil benchmarks, which also fell for a third straight day. According to market reports, concerns over potential supply disruptions from Saudi Arabia have eased, weighing on the entire oil complex.

Despite the price fall, the market structure points to ongoing supply concerns. The market remains in a steep backwardation of $28.75 per ton. This condition, where prompt prices are significantly higher than those for future delivery, typically signals tight immediate availability of the product.

Demand-Side Developments

On the demand side, Thai petrochemical firm Rayong Olefins restarted its naphtha-fed cracker on Thursday, according to a stock exchange filing by its parent company, SCG Chemicals. The facility had declared force majeure in March, and its return is expected to increase regional demand for the feedstock, potentially providing a floor for prices.