Asian naphtha price recovered marginally to reach a two-session high on Monday, with cracks extending slight losses to hit a four-session low as supplies were expected to build on incoming arbitrage volumes. Falling Indian spot premiums indicated the weaker sentiment, with BPCL selling 30,000 tonnes for mid-September loading from Mumbai to Marubeni at premiums of $9.00-plus a tonne to Middle East quotes on a free-on-board (FOB) basis.
The premiums were at least 30 percent lower than what the refiner fetched on August 26 for similar volumes for September 8-10 loading from the same port to Cargill at $14.49 a tonne FOB. "The falling premium is an indication of excess prompt supplies," said a North Asian trader, pointing out that the market took a sharp turn in less than a week. Premiums were still largely hovering around the $15.00 a tonne level last Wednesday.
More than 115,000 tonnes of African/Mediterranean naphtha will land in Asia between second-half September and first-half October despite a well-supplied market. Kuwait also started offering spot barrels for October loading in a tender which closes on Tuesday. It sold around 300,000 tonnes for September loading previously.
Gasoline cracks were at their lowest this year, at below $3.00 a barrel, due to East-West arbitrage trades tappering off after the summer driving season ended in the US in August. "Usually cracks become weaker around this time, because of seasonal factors," said a trader.
Taiwan CPC sold a 30,000-tonne gasoline cargo for October lifting at around 10 cents a barrel to Singapore spot quotes on a FOB basis, marginally lower than a previous sale for 90,000 tonnes for September lifting at about 20 cents a barrel, FOB.
SWAPS SPREADS: The September/October FOB Japan contract rose 25 cents to a be valued at a backwardation of 25 cents by 0830 GMT, with no bids/offers seen after by 1030 GMT. October/November was down 25 cents to a backwardation of 50 cents a tonne, and last bid/offered at flat/50 cents a tonne after the close. The September east-west spread lost 21 cents to $12.86 a tonne by 0830 GMT, with no bids/offers seen after the close.
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