Naphtha Prices Assessed Lower in Northeast Asia Region

The naphtha prices assessed lower in the Northeast Asia region. During the start of the second quarter of 2022, prices of naphtha decreased in the Chinese market. The ban was sanctioned on Russian imports by the west as an act of Moscow’s invasion of Ukraine against Russia. Russia was forced by the sanctions to find a new customer base for the crude.

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During the last month of the second quarter of 2022, the cost valuation of naphtha in the Chinese market was valued at around USD 1186/MT. The negative cracking margins and poor demand resulted in a price decrease for naphtha in various Asian countries. At the end of quarter two of 2022, the prices for naphtha were valued at USD 815 (INR 66490) per MT in India.

The prices of brent crude oil decreased by USD 2.82 and settled the prices at USD 96.49 per barrel, whereas the prices of WTI futures declined by USD 2.09 and were valued at USD 89.55 per barrel.

The spread between CFR Northeast Asia ethylene and CFR Japan naphtha has been hovering below the customary breakeven spread for non-integrated producers of USD 350/mt since April 29, 2022. This is one of the key petrochemical price spreads to naphtha that has decreased. It was last priced at USD 131.25/mt at the Asian close on August 23, 2022, down USD 27.50/mt from the previous week.

As per market experts, as it is approaching the end of the year, there is a lot of potential downsides than potential upside for Asian Naphtha. Japan naphtha cargo assessments averaged USD 785.11/mt in July 2022, a decrease from USD 822.89/mt in June 2022. After reaching a peak of USD 1,158.63/mt on March 7, 2022, naphtha prices have been in a downward trend ever since.

The ethylene prices displayed a mixed undertone in Asian Countries. In Northeast Asia, the price for ethylene was assessed between USD 945/MT to USD 955/MT, with a surge of about USD (+50/MT) as compared to the previously estimated value on August 30, 2022.

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Due to the bearish energy values, the prices of propylene increased higher in Asia. The cost valuation for the propylene prices was valued between USD 855/MT to USD 865/MT, with a gain of USD (+5/MT) as compared to the previous assessed value on August 30, 2022. On August 31, 2022, the prices of propylene increased and were projected between USD 870/MT to USD 880/MT.

As per procurement resource, the region of Northeast Asia assessed lower naphtha prices. Prices of naphtha dropped in the market at the beginning of the second quarter of 2022. In retaliation for Moscow's invasion of Ukraine, the west approved the import restriction on Russian goods.

The restrictions made it necessary for Russia to find other markets for its crude. The cost of naphtha in the Chinese market was estimated to be around USD 1186/MT during the last month of the second quarter of 2022. In several Asian nations, the price of naphtha decreased due to negative cracking margins and low demand. The price of naphtha in India was USD 815 (INR 66490) per MT at the end of the second quarter of 2022.