Asia naphtha cracks collapse on sluggish cracker demand

London, (Quantum Commodity Intelligence) - Naphtha refining margins in Asia have fallen 8% in a day as spot prices collapsed on Tuesday amid sluggish demand from the petrochemical sector.

Quantum's spot naphtha price on a CIF basis Japan versus June cash Brent fell to $83.88/mt from $91.02/mt on Monday, Quantum data showed, a drop of $7.14/mt.

Several deals were heard on Monday and Tuesday that depressed the crack from $94/mt at the end of last week to the lowest in several months, as spot prices fell from $587/mt CIF Japan on Friday to $583.75/mt on Tuesday.

A number of turnarounds at naphtha crackers are scheduled for the coming months, lowering the demand outlook.

May cracks versus July cash Brent, however, fell just $4.60/mt day-on-day, reflecting stronger demand for deliveries late in the northern hemisphere summer.

The drop comes as spot gasoline cracks remain relatively weak relative to the curve.

May and June RON 92 gasoline cracks basis FOB Singapore rose around $0.20-0.28/b to $7.13/b and $6.92/b, respectively.

That compares to a flatlining of the spot crack at $6.74/b.

The structure reflects a dearth of demand for road fuel globally – a dynamic that has suppressed refinery margins in Asia and may result in sluggish throughput of crude.