Asia naphtha prices spike after Platts bans Russian oil in Japan benchmark

Quantum Commodity Intelligence - Naphtha prices in Asia surged $13/mt relative to crude on Friday after price reporting agency Platts said it would not take Russian naphtha into account when assessing prices delivered into Japan.

May swaps rose $1.50/mt relative to Brent, equivalent to a near $13/mt rise, after Platts said it would no longer include offers of Russian origin into account when publishing its cash assessment of cargoes delivered into Japan.

Naphtha swaps for April were pegged at $895/mt CIF Japan on Friday at 1630 Singapore time, up $22/mt on the day, while its discount to Brent futures narrowed from -$2.70/b to -$1.20/b – a three week low.

"Platts has observed that, for a significant portion of the Asian naphtha spot market, material of Russian origin is no longer deemed merchantable on the same basis as other production regions," the publisher said.

"As such, Platts assessments of Asian naphtha will no longer reflect Russia-origin product, effective immediately," it said.

Platts' cash assessment is aggregated into a monthly average and used to settle financial derivatives that are then cleared on ICE and used by petrochemical producers to hedge feedstock costs.

Energy major BP had been offering open origin naphtha aggressively in the Platts window for the past week and sold two cargoes at prices close to or under swap values for the same delivery window.

Cargoes had been trading at significant premiums to the delivery window for at least the past year.

The move to ban Russian origin in the Asia assessment comes two weeks after the price reporting agency did the same for Europe.

Observers questioned the rationale of leaving two weeks between the decisions, given the companies most active in the Asian window are the same as those in Europe.

Naphtha is also used as a gasoline blendstock.