Asia’s naphtha demand fundamentals remained weak, with buying interest still curtailed by ongoing scheduled maintenance in northeast Asia – even though cracker production spreads have improved in the past week.

Cracking margins for the petrochemical feedstock softened and went further into the negative territory.

Production spreads for steam cracker derivatives improved due to softening naphtha prices earlier, not because of better downstream demand, one Singapore-based trader said.

A handful of buyers remained on the sidelines as they had no interest in stocking up amid expectations of unchanged run rates in the next two weeks.

At least two Southeast Asian crackers are likely to keep rates steady at around 80% until November.

Buying interest for heavy naphtha also slowed from South Korea, with most covering their requirements a week ago for second-half of November. More buying for December will only emerge two weeks later, one northeast Asian refiner source said.

Reforming margins, which were still above $20 a barrel, however, buoyed the naphtha markets as it remains economical for gasoline blenders to seek naphtha as a feedstock.

On the supply front, the flow from the west to east should likely continue into the fourth-quarter given the upward trend in arbitrage spreads, although there was volatility earlier, said Sparta Commodities’ Jorge Molinero.

Gasoline-wise, activity remained slow, but prices remain buoyed by expectations of more regional requirements to emerge in southeast Asia as some refineries head for scheduled maintenance. Cracking margins for the motor fuel were almost unchanged from the previous session.

Weakness in the west continued to exert downward pressures in the market, with demand decreasing in line with the seasonal lull period. Cargoes still seem to be in excess in the west, a Singapore-based trade source said.

SINGAPORE CASH DEALS

– One gasoline deal, no naphtha deal

REFINERY NEWS

– ExxonMobil plans to begin restarting a coker at its 522,500 barrel-per-day (bpd) Baton Rouge, Louisiana refinery over the weekend, people familiar with plant operations said on Friday.

NEWS

– Oil prices slipped on Monday after surging last week, with investors waiting to see if the Israel-Hamas conflict draws in other countries – a development that would potentially drive up prices further and deal a fresh blow to the global economy.
Source: Reuters (Reporting by Trixie Yap; Editing by Tasim Zahid)