Asia’s naphtha refining profit margin flipped to premiums on Thursday for the first time since June 6 amid some recovery in demand from South Korea and a fall in Russian supplies to Singapore’s trading hub.

The crack rose to a premium of 82 cents per metric ton over Brent crude, compared with a discount of $10.03 a day earlier. The price of first-half September naphtha rose by about $10 to $599.25 per metric ton and traded $2 higher than the following month in backwardation structure.

Russian supplies to Singapore declined to none this week from about 235,057 tons in the week to July 12, Enterprise Singapore data showed. Total imports declined to around 174,688 tons in the week to Wednesday from about 346,030 in the prior week.

“There are early signs of a recovery in demand in third-quarter 2023, led by Asia Pacific crackers returning from maintenance,” analysts at consultancy FGE said in a note.

That said, FGE expects several crackers, especially merchant ones, to continue running at reduced rates.

“Even with the seasonal increase in downstream demand, cracker margins in the Asia Pacific region will only rise moderately in third quarter,” FGE said.
At the physical window, there were no trades for naphtha, while 50,000 barrels of the benchmark-grade of gasoline was traded.

NEWS

– Chinese state-owned energy giant Sinopec’s production of synthetic fibres- including key products such as polyester – slid 6.5% on last year, while ethylene output rose only 0.4%. Production of chemical feedstocks including naphtha also shrank 3.0%. nL1N3960S9
– China’s imports of crude oil from Russia hit an all-time high in June, Chinese government data showed on Thursday, with refiners continuing to snap up Russian ESPO even as discounts against international benchmarks narrow.
Source: Reuters (Reporting by Mohi Narayan; Editing by Maju Samuel)