Benchmark C+F Japan naphtha price hits seven-year high amid spike in crude

The benchmark C+F Japan naphtha cargo assessment hit a seven-year high of $888.125/mt at the Asian close Feb. 22, S&P Global Platts data showed, led by a jump in crude oil futures.

The assessment was last higher at $897.875/mt Sept. 5, 2014 and has risen 20.32% from $738.125/mt since the start of the year, Platts data showed.

Crude oil futures have been volatile in recent sessions amid escalating tensions between Russia and Ukraine, after the latest round of Western sanctions against Russia for its recognition of the rebel-held Donetsk and Luhansk regions, Platts reported earlier.

The developments sparked a rise in crude prices, as ICE Brent crude futures rose $5.39/b day on day and $4.13/b week on week to $99.02/b at the 0830 GMT Asian market close Feb. 22, supporting the rise in Asian naphtha prices.

The naphtha market in Asia was supported by supply-side fundamentals on the back of limited Western arbitrage. Demand, however, was weighed on narrowing olefin margins, tracked closely by steam cracker operators.

The key CFR Northeast Asia ethylene to C+F Japan naphtha spread narrowed $35/mt week on week to $331.875/mt at the Asian close Feb. 22, Platts data showed, within the typical breakeven level of $300-$350/mt for non-integrated producers, sources said.

The thin margin is likely push steam crackers to reduce operation run rates, market sources said.

The softer market was reflected in the CFR Japan naphtha physical crack against front-month ICE Brent crude futures, which fell $9.10/mt week on week to $145.475/mt at the Asian close Feb. 22, Platts data showed.