Asia’s naphtha refining profit margin rose slightly on Tuesday but continued to trade deep in the negative amid poor demand fundamentals from petrochemical units.

The crack rose by $2.35 to minus $50.03 a metric ton over Brent crude. Markets flipped to backwardation on Monday, with the first-half August naphtha trading $1.50 higher than the following month.

On the supply side, Russian naphtha arrivals into Asia soared to an over one-year high of 800,000 mt this month, while shipments from the Mediterranean nearly doubled month-on-month to 500,000-600,000 mt, assessments by Refinitiv Oil Research showed.

Demand for naphtha could get some relief as more South Korean crackers come online after a turnaround in June and July.

“Nevertheless, the upside will likely be capped due to the prevailing sluggish run rates, while ethylene-naphtha margins may remain squeezed as petrochemical prices could potentially soften further on the back of rising downstream supplies,” Refinitiv Oil Research said in a note.

NEWS

– Oil prices slipped on Tuesday ahead of data shedding light on U.S. appetite for fuel during the summer driving season, with the Brent benchmark’s price structure indicating bulls are retreating.

– Indonesia’s state energy company Pertamina said late on Monday it plans to develop battery packs for electric motorcycles with Electrum, a firm that aims to put millions of electric two-wheelers on the roads of the Southeast Asian country.
Source: Reuters (Reporting by Mohi Narayan; editing by Eileen Soreng)