US-Asia naphtha arbitrage volume hits 9-month high for January loadings

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Highlights

January-loading US-Asia arbitrage surges to 522,000 mt from 212,000 mt in December

Asia to see at least 772,000 mt of February-arrival naphtha from US

US-Japan arbitrage remains open on paper

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Fixture volumes for naphtha cargoes from the US Gulf Coast bound to Asia have hit a nine-month of 560,000 mt for January loading, a surge of almost 150% from the December loading program, data from sources and S&P Global Platts trade-flow software cFlow showed Jan. 19.

Robust naphtha by the Far East petrochemical hub has attracted Western arbitrage interest in recent weeks, and the US supplies the light naphtha grades that are currently in demand due to positive olefin margins.

The US-Asia naphtha fixture volume was last higher in April 2020 at 880,000 mt loaded for shipping to destinations in Asia for arrival over May 2020, Platts data showed.

Total May 2020-arrival cargoes from the Americas into Asia was 1.032 million mt, while total February 2021-arrival cargoes are currently at least 772,000 mt, data from market sources and Platts cFlow showed.

The high US volume for February arrival cargoes was partially due to weather delays in the US Gulf, as well as delays at the Panama Canal, which rolled over some cargoes into the next delivery cycle, sources said.

Typically voyages from the USGC take 38-40 days to arrive in North Asia via the Panama Canal, shipping sources said.

Even with these higher-than-usual volumes, bullish persisted in the Asian naphtha market as new naphtha-fed steam crackers were due to come online from H2 January, sources said.

Also, total Western arbitrage volumes would amount to more than 2 million mt for February arrival, with at least 1.205 million due to ship from Europe, the Mediterranean and North Africa, data from market sources and Platts cFlow showed.

Typically the East of Suez markets are net short 2 million mt/month of naphtha, which is met by Western arbitrage shipments, while in 2021 the incremental demand of at least 100,000-150,000 mt/month from fresh steam cracker startups is expected to be met by US shipments, Platts earlier reported.

On paper, may be able to send some arbitrage shipments, as the physical spread between naphtha C+F Japan and FOB USGC after including MR freight was in positive territory, Platts data showed.

This cross-regional spread minus Medium Range freight between FOB US Gulf Coast and C+R Japan naphtha has largely been in positive territory since early-December 2020, and was last at $20.915/mt at the US close Jan. 15. Traders also have to consider other costs such as port charges, Panama Canal fees or changes in market structure affecting delivered prices.

Benchmark physical C+F Japan naphtha has since edged down $12.625/mt on the day to $516/mt on Jan. 18’s Asian close, on the back of the half month roll of the trading cycle into H1 March delivery cycle, Platts data showed.

For the USGC to Northeast Asia voyages, the MR tanker freight was stable day on day at $1.3 million on Jan. 15, while the corresponding Long Range I tanker freight was assessed at $1.85 million, Platts data showed.

AMERICAS TO ASIA NAPHTHA FIXTURES:

Vessel

Quantity (‘000 kt)

Cargo

Laycan

Voyage

Freight

Charterer

Jo Pinari

60

NA

Feb1

US Gulf-Far East

$1.85m

Pantos

Silver Gertrud

38

NA

Jan22

US Gulf-Japan

$1.295m

Equinor

MP MR Tbn

38

NA

Jan20

US Gulf-Far East

rnr

cnr

Turmoil

38

NA

Jan20

US Gulf-Japan

$1.3m

BP

PTI Amazon

38

NA

Jan19

US Gulf-Japan

rnr

cnr

Trafi Tbn

38

NA

Jan15

US Gulf-Far East

$1.29m

P66

Maribel

60

NA

Jan???

US Gulf-Far East

$1.85m

cnr

Torm Sublime

38

NA

Jan9

US Gulf-Yeosu

rnr

cnr

Klara

38

NA

Jan8

US Gulf-Japan

$1.15m

BP

Maersk Seafarer

38

NA

Jan5

US Gulf-Japan

rnr

cnr

BW Yarra

60

NA

Jan2

US Gulf-Yeosu

$1.8m

Trafigura

Ardmore Sealifter

38

NA

Jan1

US Gulf-Far East

$1.225m

BP

Nexus Victoria

60

NA

Jan1

US Gulf-Far East

$1.7m

Clearocean Marvel

38

NA

Jan1

US Gulf-Mizushima

$1.225m

P66

Leopard Moon

38

NA

Dec31

US Gulf-Mizushima

rnr

cnr

SM Navigator

38

NA

Dec27

US Gulf-Sendai

rnr

cnr

Clearocean Miracle

38

NA

Dec26

US Gulf-Japan

$1.1m

BP

Orange Victoria

60

NA

Dec25

US Gulf-Yeosu

$1.6m

cnr

Torm Splendid

38

NA

Dec17

US Gulf-Far East

rnr

cnr

SM Navigator

38

NA

Dec27

US Gulf-Japan

rnr

cnr

Clearocean Miracle

38

NA

Dec26

US Gulf-Far East

$1.1m

BP

Orange Victoria

60

NA

Dec25

US Gulf-Far East

$1.6m

cnr

Key: NA=Naphtha, rnr=rate not reported, cnr=charterer not reported

Data from: Market sources, S&P Global Platts cFlow

Author

Wanda Wang

Editor

Wendy

Commodity

Oil, 
Metals, 

Shipping

Source: Platts

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