Six tankers with naphtha to sail from Europe to Asia
At least six tankers carrying naphtha have been booked to sail from Europe and the Mediterranean to Asia to take advantage of an arbitrage opportunity that could be shortlived, traders said on Thursday, Reuters reports. A window for further bookings remained open on Thursday as the east-west spread for naphtha continued to trade near multi-month highs, making the shipments still profitable for traders.
Asian naphtha swaps for December have risen to a seven-month high of $21.50 a tonne against the market in Europe this week, while January swaps similarly touched a peak of $16 a tonne on Thursday, traders said.
The flow of naphtha set to hit Asian markets in the coming weeks, however, could soon push down prices and wipe out the opportunity to ship more excess barrels from Europe east.
"I don't believe they need the barrels. Personally, I think this market looks in worse condition than two weeks ago, and I think the game in the East will backfire when all the physical barrels turn up," one naphtha trader cautioned.
Asian markets have tightened as outages by refineries in the Gulf and the restarting of Formosa Petrochemical's cracking complex in Taiwan have contributed to an increasingly wide naphtha market premium versus the West.
In Europe, slow industrial growth has helped dampen demand for naphtha, which also is struggling to compete against rival feedstock propane amid weak consumption by petrochemical end-users.
"European naphtha keeps having to collapse to clear its oversupply," said a naphtha trader.
SNAP
The window of opportunity from Europe could snap shut, traders said, as supply in the region drains into Asia, where industrial demand led by China is already flagging.
China is Asia's top petrochemical importer and is facing a slowing export growth rate. November trade data due later this week expected to reveal the weakest growth in two years.
The Chinese export sector -- a key driver of economic growth -- is set to suffer more headwinds in the coming months, analysts say, as Europe's debt crisis worsens and consumer spending in the United States remains weak.
Meanwhile, naphtha deliveries from the West will soar in December, and more may follow as long as the window for arbitrage remains open.
Traders said that two long-range tankers have been booked by Total to carry naphtha from the Russian port of Traipse to Asia this month.
In addition, traders said Statoil was shipping an 80,000 tonne cargo of naphtha from Norway to Asia and that BP had booked a 55,000 tonne tanker to head East from Greece.
Glencore <Glen. l> was also said to be taking advantage of the rallying east-west spread, shipping naphtha from Moroccan and Italian refineries to Asia, while Vito was also expected to ship Libyan naphtha East.
The wave of arrivals in the weeks ahead will trigger a drop in Asian prices as supply suddenly flips from tight to comfortable, a naphtha trader predicted.
"What tends to happen is people fix cargoes, the East panics and it all comes off," he said.
Asian naphtha swaps for December have risen to a seven-month high of $21.50 a tonne against the market in Europe this week, while January swaps similarly touched a peak of $16 a tonne on Thursday, traders said.
The flow of naphtha set to hit Asian markets in the coming weeks, however, could soon push down prices and wipe out the opportunity to ship more excess barrels from Europe east.
"I don't believe they need the barrels. Personally, I think this market looks in worse condition than two weeks ago, and I think the game in the East will backfire when all the physical barrels turn up," one naphtha trader cautioned.
Asian markets have tightened as outages by refineries in the Gulf and the restarting of Formosa Petrochemical's cracking complex in Taiwan have contributed to an increasingly wide naphtha market premium versus the West.
In Europe, slow industrial growth has helped dampen demand for naphtha, which also is struggling to compete against rival feedstock propane amid weak consumption by petrochemical end-users.
"European naphtha keeps having to collapse to clear its oversupply," said a naphtha trader.
SNAP
The window of opportunity from Europe could snap shut, traders said, as supply in the region drains into Asia, where industrial demand led by China is already flagging.
China is Asia's top petrochemical importer and is facing a slowing export growth rate. November trade data due later this week expected to reveal the weakest growth in two years.
The Chinese export sector -- a key driver of economic growth -- is set to suffer more headwinds in the coming months, analysts say, as Europe's debt crisis worsens and consumer spending in the United States remains weak.
Meanwhile, naphtha deliveries from the West will soar in December, and more may follow as long as the window for arbitrage remains open.
Traders said that two long-range tankers have been booked by Total to carry naphtha from the Russian port of Traipse to Asia this month.
In addition, traders said Statoil was shipping an 80,000 tonne cargo of naphtha from Norway to Asia and that BP had booked a 55,000 tonne tanker to head East from Greece.
Glencore <Glen. l> was also said to be taking advantage of the rallying east-west spread, shipping naphtha from Moroccan and Italian refineries to Asia, while Vito was also expected to ship Libyan naphtha East.
The wave of arrivals in the weeks ahead will trigger a drop in Asian prices as supply suddenly flips from tight to comfortable, a naphtha trader predicted.
"What tends to happen is people fix cargoes, the East panics and it all comes off," he said.
