Decline in the spot purchases slumps the Global Naphtha prices along with demand disruption

During the week ending on February 23, global Naphtha prices experienced a decline. In Germany, the market saw a drop due to sluggish market offtakes, while adverse weather conditions slowed down bunker barge reloading, further impacting demand. Similarly, in the APAC region, South Korea witnessed a decrease attributed to a decline in the manufacturing sector. Both Japan and the US also observed declines in Naphtha prices, reflecting global fluctuations influenced by factors like production levels and geopolitical changes.

In European Regions, Naphtha prices underwent a decline in the week ending on February 23. After a significant surge in the previous week, the German market experienced a notable decrease of nearly 2%, with Naphtha prices dropping from 670 USD/ton to 658 USD/ton. Despite an uptick in upstream crude oil, prices saw a decline across most European countries, including Dutch and British markets. The demand that had picked up in the preceding week did not sustain in the following week due to adverse weather conditions, including strong winds and sea swells offshore, causing a slowdown in the reloading of bunker barges. The previous week ending on 16 Feb had witnessed an increase in Naphtha prices in European countries, influenced by a backward market characterized by higher spot prices than future prices. This market trend was attributed to heightened cracking demand in recent weeks, leading to fluctuations in spot prices across European counties.

In the APAC region, during the week ending on February 23, there was a substantial decrease of approximately 4.2% in Naphtha prices in the South Korean market. The manufacturing sector experienced a decline in the third week of February 2024, with manufacturers reporting a slowdown in domestic demands, raw material purchase prices, sales prices, and profitability. Conversely, export-oriented demands and sales also decreased in the country, leading to an overall decline in production levels. Naphtha prices in Japan also declined by 4.1%, as cracks in Asia's Naphtha prices continued to spiral down to their lowest levels. Asia diversified its crude oil and oil cracks supply basket, with non-OPEC+ producers boosting output in 2024, contributing to the decline in Naphtha prices in most Asian countries and globally.

In the US market, Naphtha prices also witnessed a market decline in the wake of limited spot purchasing activities. Demand for fuel oils picked up for both exports and ship refuelling, but all product categories showed declines, signalling a more widespread rebound in consumption. Some reports indicated gains in past weeks were due to more ships refuelling at the port before taking longer routes around the tip of Africa instead of the Red Sea. However, other reports suggested the Red Sea was not a factor yet in bunker demand at the port. Prices exhibited significant fluctuations globally during this period.

ChemAnalyst’s predicts that Naphtha prices are poised to surge globally in the coming weeks, anticipating a continuation of the upward trend observed since December. The prices have held above the December lows, signalling a potential sustained increase. This uptrend aligns with the strengthening crude oil benchmarks, which are on the rise globally. The escalating geopolitical tensions, coupled with the evolving dynamics of the chemical industry, are anticipated to contribute to the observed price movements in the upcoming week. Furthermore, the surge in prices for downstream derivative products such as ethylene, propylene, toluene, and benzene are expected to further amplify the overall increase in Naphtha prices on a global scale. The chemical landscape's response to changes in oil prices and geopolitical factors is likely to play a crucial role in shaping the trajectory of Naphtha prices in the forthcoming weeks.