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Asian naphtha prices at multi-week highs on tight supply, firm crude

Asian naphtha prices touched multi-week highs Sept. 16 as tight supply and firm demand from naphtha-fed steam crackers boosted crack values and cargo prices.

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The front month CFR Japan naphtha Brent crack stood at a five-week high of $2.45/b at the Asian close Sept. 16, up 25 cents/b week on week, S&P Global Platts data showed. The crack was last higher Aug. 12 at $2.88/b.

An uptick in crude oil prices coupled with positive olefin margins bolstering naphtha demand pushed the benchmark C+F Japan naphtha price to a near seven-week high of $696.50/mt at the Sept. 16 Asian close, a rise of $23.875/mt week on week, Platts data showed. The price was last higher July 30 at $701.250/mt.

Positive olefin margins continue to drive demand for naphtha as a cracker feedstock. The CFR Northeast Asia ethylene spread to C+F Japan naphtha cargo rose $21.125/mt week on week to $413.50/mt Sept. 16, Platts data showed. This key margin watched by olefin producers has been above the breakeven of $350/mt for non-integrated producers since Sept. 2 and is likely to keep many crackers operating at full or close to full levels.

On the supply side, the US Gulf is continuing to grapple with production disruptions in the aftermath of Hurricane Ida and Tropical Storm Nicholas. After 95% of US Gulf oil and gas production was shut at end August as Category 4 Ida made landfall in Louisiana, 513,878 b/d of crude or 28.2% remained offline Sept. 16, according to the US Bureau of Safety and Environmental Enforcement. Category 1 Nicholas, which hit the Texas Gulf Coast Sept. 13, had a more modest impact but has slowed down restoration activities, Platts reported earlier.

The US Gulf is a key supplier of light naphtha grades in demand by Asia's steam crackers, as they are keen on high paraffin naphtha to maximize olefins production.