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Asian naphtha crack soars above $50/mt to year-to-date high on gasoline strength

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Asian naphtha crack soars above $50/mt to year-to-date high on gasoline strength

Singapore — The CFR Japan naphtha crack spread surged above the $50/mt mark Thursday, to hit a year-to-date high of $52.63/mt, shrugging aside the typical second-quarter lull in demand season thanks to the recent uptick in the regional gasoline market, sources said Friday.

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The benchmark CFR Japan naphtha physical crack against front-month ICE Brent crude futures climbed $5.48/mt on the day to be assessed at $52.63/mt at Thursday's Asian close, the highest level seen in nearly three months, S&P Global Platts data showed.

The crack was last higher on December 28 at $64.18/mt.

CFR Japan naphtha crack

The naphtha crack tracked the bullishness in Asian gasoline cracks, which has been seeing a steady improvement as gasoline supply tightened due to regional refinery maintenance.

Market participants noted that demand for naphtha for use in gasoline blending firmed as the Singapore reforming margin eased slightly from a ten-month high of $13.10/b on March 12, to $12.63/b Thursday. The reforming margin was last assessed higher on May 2, 2018 at $13.20/b.

The FOB Singapore 92 RON gasoline physical crack against front-month ICE Brent crude oil futures edged up by 75 cents/b on the day to be assessed at $6.45/b at the Asian close Thursday, S&P Global Platts data showed.

Month-to-date, the FOB Singapore 92 RON gasoline crack against front-month Brent futures averaged $4.47/b, retracing losses and continuing to firm while in positive territory, as compared with the February average of minus 8 cents/b, the data showed.

Despite the slew of turnarounds at naphtha steam crackers in North Asia, buying interest for both paraffinic and heavy full range naphtha grades continued to be observed in the spot market.

For one, Taiwan's Formosa Petrochemical Corp. Wednesday bought open spec naphtha with minimum paraffin content of 70% for H2 April delivery to Mailiao, at a premium of around $2/mt to the H2 March average of Mean of Platts Japan naphtha assessments on a CFR basis.

On the swaps front, April/May MOPJ naphtha swaps spread widened by $1.5/mt from Wednesday to plus $4.5/mt. The front-month timespread was last higher at plus $5/mt on December 28, 2018.

--Sue Koh, sue.koh@spglobal.com

--Jin Ming Lim, jinming.lim@spglobal.com

--Mark Tan, mark.tan@spglobal.com

--Edited by Norazlina Juma'at, norazlina.jumaat@spglobal.com

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