The naphtha complex continued to strengthen this fortnight in both regions. There was strong trade house buying from a few players in the know about Russian flow, which pushed the bull run. Strong pronap and gasnaph selling also contributed to the strength, alongside a large-size stop out from a fund in gasnaph. The M1 NWE naphtha crack rose to -$2.30/bbl, its highest level since 11 Nov. OI rose around 3.1mb in the 2 weeks to 15.76mb on 07 Feb. Additions in the past week have been fairly flat and have seen d/d drops on 4 and 6 Feb. Trade houses bought a net of 379kb of the prompt in the fortnight, overall trade house net positioning rose but remains negative. This could represent short covering flow. Refiners sold into the rally, selling 353kb to Onyx. The Mar/Apr’25 NWE naphtha spread rallied from a fortnightly low of $6.00/mt on 29 Jan to reach resistance at $10.00/mt on 10 Feb, correcting to $9.50/mt on 11 Feb. There was strong trade house buying in the front spread.
The Mar’25 naphtha East/West (MOPJ vs NWE naphtha) strengthened initially this fortnight, rising to reach resistance at $19.00/mt on 6 Feb and dropping to $17.25/mt on 11 Feb. Net positioning in the E/W initially increased but later saw more substantial selling from trade houses and majors. Between 3-10 Feb, majors sold 550kb, resulting in them holding the largest net short position at -587kb. Mar/Apr’25 MOPJ rallied with MOC buying and strong buying from trade houses down the curve in MOPJ.
Open interest (OI) in the naphtha generally strengthened over the past two weeks, with M1 MOPJ crack OI up 92%, driven by 885kb of trade house selling (Feb 4-7). Gasnaph OI declined as refiners sold the differential, holding a 349kb short. In Q2’25, refiners partially covered shorts. MOPJ saw mixed interest, with strong petchem selling on Feb 11.
The TC5 freight (from the Middle East to Asia) has risen this fortnight, with the M1 contract rising from below $30.20/mt on 27 Jan to $33.30/mt on 10 Feb. This may be pricing in the growing instability in the ceasefire between Israel and Hamas and, by extension, the potential of Houthi attacks in the Red Sea restarting.
Total production across 72 petrochemical plants in Iran reached 96.3 million mt during the first nine months of the current Iranian calendar year (21 Mar – 20 Dec 2024), marking a 3.5% increase compared to last year, according to Press TV. The report stated that Iranian petrochemical exports totalled $8.5 billion between April and December, with approximately $3.3 billion allocated for importing essential industry needs, including chemicals and catalysts. Additionally, the volume of petrochemical exports from Iran grew by 7% year-on-year during the nine-month period ending in late December.
The chairman of Indian Oil, A S Sahney, forecasts that petrochemical margins will not recover well this year compared to the projected growth in gasoline and diesel demand.
On 10 Feb, butadiene remained bullish post-Lunar New Year due to tight supply and maintenance, with US and European cargoes sold to South Korea while China’s domestic supply remained stable. Aromatic prices rose slightly on post-holiday demand, though weak sentiment capped gains. Olefins stayed steady as cautious Chinese buyers kept ethylene prices stable, while plant shutdowns in Malaysia and South Korea tightened propylene supply in Southeast Asia.
