For the Quarter Ending September 2024
North America
Throughout Q3 2024, Naphtha pricing in North America witnessed a persistent decline, with significant factors contributing to this trend. The market was heavily influenced by a combination of reduced demand, oversupply, and weakening global economic conditions. Decreased industrial activity, particularly in downstream sectors, led to a slump in demand for Naphtha, exacerbating the surplus in the market. Additionally, the ongoing geopolitical uncertainties and trade tensions further dampened market sentiment, pushing prices downward.
In the USA, where the most substantial price changes were observed, the Naphtha market mirrored the overall regional trend. The correlation between Naphtha prices and international crude oil markets remained strong, with pricing dynamics closely following crude oil fluctuations. The -21% decrease from the same quarter last year highlighted the significant price erosion over time, compounded by the -3% decline from the previous quarter in 2024. The comparison between the first and second half of the quarter, showing a -3% decrease, further emphasized the continued downward trajectory.
The latest quarter-ending price of USD 552/MT of Naphtha FOB Texas in the USA underscored the prevailing negative pricing environment, reflecting a challenging period for Naphtha markets in North America.
APAC
In Q3 2024, the Naphtha market in the APAC region experienced a significant decline in prices. Several factors influenced this downward trend, including decreased demand from downstream sectors, oversupply of Naphtha, and weak macroeconomic conditions. The bearish market sentiment was exacerbated by low refining margins, geopolitical tensions impacting crude oil prices, and reduced production rates in the petrochemical industry.
Japan, in particular, witnessed the most notable price changes during this quarter. Overall trends in Japan reflected the regional context, with a consistent decrease in Naphtha prices. Seasonality and correlation in price changes highlighted a clear downward trajectory, with a -8% change from the same quarter last year and a -3% change from the previous quarter in 2024. The comparison between the first and second half of the quarter showed a substantial -4% decrease. The quarter-ending price of USD 650/MT of Naphtha CFR Tokyo in Japan marked the culmination of this negative pricing environment, illustrating a challenging period for the Naphtha market in the region.
Europe
In Q3 2024, the Naphtha market in Europe experienced a notable decline in prices, with the Netherlands being the most impacted. Several factors contributed to this downward trend. Firstly, oversupply in the market due to increased production and reduced demand from the petrochemical sector led to pricing pressures. Additionally, weakening global economic conditions and decreased refining margins further pushed prices downwards. The seasonal shift towards lower energy demand also played a role in the declining prices. Comparing to the same quarter last year, prices saw a significant decrease of 17%, indicating a prolonged downward trajectory. Furthermore, the quarter-on-quarter change in 2024 showed a 3% decline, reflecting the ongoing negative trend. The second half of the quarter saw a more pronounced decrease of 7% compared to the first half, emphasizing the intensification of price declines.Ultimately, the quarter concluded with Naphtha prices at USD 545/MT FOB Rotterdam in the Netherlands, underscoring the prevailing negative pricing environment characterized by consistent decreases throughout the period.
MEA
The third quarter of 2024 witnessed a consistent decline in Naphtha prices across the MEA region, with notable impacts on the market dynamics. The significant factors influencing this downward trend included an oversupply of crude oil, subdued demand from key importing regions, and geopolitical uncertainties affecting supply chains. These factors collectively contributed to a bearish sentiment in the Naphtha market, leading to decreased prices. In Saudi Arabia specifically, the market experienced the most significant price changes during this period. The overall trend displayed a negative correlation, with prices declining by 9% compared to the same quarter last year. However, the quarter-on-quarter change remained relatively stable at 0%, indicating a temporary stabilization amidst the overall downward trajectory. Furthermore, the price comparison between the first and second half of the quarter revealed a 3% decrease, reflecting a sustained decline in Naphtha prices. Ultimately, the quarter concluded with Naphtha prices in Saudi Arabia standing at USD 593/MT FOB Jeddah, underscoring the prevailing decreasing sentiment in the market.
South America
In Q3 2024, the Naphtha pricing in South America witnessed a significant decline, reflecting a negative market sentiment. This quarter has been characterized by a multitude of influential factors contributing to the downward trend in prices. The 29% decrease from the same quarter last year can be attributed to weakened demand from downstream industries and oversupply in the market. The 4% decrease from the previous quarter in 2024 was mainly driven by reduced refining margins and decreased buying interest amid the weak market situation. Brazil, experiencing the most substantial price changes, saw a correlation in price fluctuations, with a notable -3% difference between the first and second half of the quarter. This trend aligns with the overall negative sentiment in the market. The latest quarter-ending price of USD 520/MT of Naphtha EXW-Rio de Janeiro in Brazil signifies the continued downward trajectory in pricing. The seasonality and correlation in price changes underscore a challenging pricing environment, marked by stability at lower price levels.
For the Quarter Ending June 2024
North America
In Q2 2024, the North American naphtha market experienced a pronounced downward trajectory in prices, driven by several significant factors. The quarter saw a consistent decrease in naphtha prices due to high supply volumes, subdued demand from downstream petrochemical sectors, and easing crude oil prices. The ample supply of naphtha, largely influenced by increased output from key global producers, created a glut in the market, putting downward pressure on prices. Additionally, the petrochemical industry's sluggish demand, exacerbated by high inflation rates and lower trading activities, further contributed to the bearish market sentiment. The correlation between crude oil and naphtha prices remained strong, with naphtha prices mirroring the declines observed in crude oil markets.
Focusing on the USA, the region experienced the most significant price fluctuations within North America. The overall trend was notably negative, influenced by seasonal factors such as the underwhelming summer driving season which did not meet expected demand levels.
In comparison to the same quarter last year, naphtha prices declined by 9%, reflecting a substantial year-over-year decrease. From the previous quarter in 2024, prices recorded a modest drop of 1%, highlighting a persistent but gradual decline. Within Q2, the first half of the quarter saw sharper price drops compared to the second half, recording a 6% decline. Concluding the quarter, the price of naphtha underscored a consistently negative pricing environment throughout the period. The market dynamics, characterized by high inventories and low demand, have overwhelmingly contributed to the negative sentiment, leaving the pricing environment firmly in the negative territory for Q2 2024.
APAC
The second quarter of 2024 has been challenging for the Naphtha market in the APAC region, marked by a consistent decline in prices driven by several significant factors. The primary reason for this downturn has been an oversupply of Naphtha, exacerbated by low demand from downstream petrochemical industries. Additionally, the continuous fluctuation and overall decrease in upstream crude oil prices have further pressured Naphtha valuations. Despite the occasional rallies in crude oil markets, the abundant supply and weak demand fundamentals have maintained a bearish sentiment across the region. Focusing on Japan, the country has experienced the most pronounced price volatility this quarter. The Naphtha market in Japan exhibited an overall decreasing trend, significantly influenced by seasonal factors and economic conditions. The quarter saw a substantial price decline, with a 4% dip between the first and second halves of the quarter. Compared to the same quarter last year, prices plummeted by 37%, reflecting a sharp contrast to the more stable 1% decline from the previous quarter in 2024. This indicates that the pricing environment has been predominantly negative, characterized by persistent downward pressure. The latest quarter-ending price for Naphtha CFR Tokyo stands at USD 703/MT, underscoring the negative trajectory. The overall trends in Japan reveal a confluence of oversupply, subdued demand, and stable yet unsupportive crude oil prices, leading to a decisive decline in Naphtha prices. This consistent decrease highlights the challenging market conditions, emphasizing the negative pricing environment throughout the quarter.
Europe
In Q2 2024, the European naphtha market experienced a notable decline in prices, influenced by several critical factors, creating a generally negative pricing environment. The primary factor was the significant drop in crude oil prices, which directly impacted naphtha's valuation. This decline in crude oil prices was driven by a combination of oversupply and weakening demand. Geopolitical tensions, particularly in the Middle East, exacerbated the situation by disrupting supply chains, while economic uncertainties in major markets, including Europe and the US, restrained industrial demand. Furthermore, increased naphtha supply from regions like the US Gulf Coast and the Arab Gulf, driven by arbitrage opportunities, contributed to the downward pressure on prices. High inventory levels, subdued purchasing activity, and cautious market sentiment due to inflationary pressures and economic sluggishness also played significant roles. Focusing on Germany, which witnessed the most substantial price changes, the overall trend in Q2 was characterized by a marked decline. The seasonal demand uptick typically expected during this period failed to materialize, largely due to weak downstream demand from sectors like petrochemicals. The correlation between declining crude oil prices and naphtha was evident, reflecting the interconnectedness of these markets. Compared to the same quarter last year, naphtha prices in Germany decreased by an impressive 15%. This stark contrast highlights the negative shift in market sentiment and economic conditions. In comparison to the previous quarter in 2024, however, the price change was recorded at 0%, indicating a stabilizing albeit low market environment. Within Q2 2024 itself, the first half of the quarter saw prices decline by 3% compared to the second half, evidencing a continual negative trend. Overall, the Q2 2024 pricing environment for naphtha in Europe, and more specifically in Germany, was decisively negative, driven by a convergence of oversupply, weak demand, and economic uncertainties, leading to significant price reductions.
MEA
During Q2 2024, the naphtha market in the MEA region experienced a steady decline in prices, driven by several significant factors. Firstly, the global crude oil market showed a downward trend, which directly impacted naphtha prices as it is a by-product of crude oil. Additionally, the surplus supply of naphtha due to high production levels and stable import activities led to an oversaturated market, further depressing prices. Coupled with weak demand from downstream industries such as petrochemicals, the market saw minimal buying interest, exacerbating the price drop. Focusing on Saudi Arabia, the country experienced the most pronounced price changes within the MEA region, reflecting the overall bearish sentiment of the market. Seasonal variations played a crucial role, as the transition into the off-season for gasoline and diesel shifted focus towards procurement activities rather than active trading. Moreover, despite a brief increase in demand for ethylene cracking, overall market fundamentals remained weak. The correlation between naphtha prices and upstream crude oil prices remained significant, with the latter's decline mirroring the former's downturn. The naphtha prices in Saudi Arabia decreased by 38% compared to the same quarter last year, highlighting the substantial downward shift. The percentage change from the previous quarter in 2024 was recorded at 0%, indicating that while the prices remained stable quarter-on-quarter, the yearly comparison presented a clear declining trend. A detailed comparison between the first and second halves of the quarter showed a 4% decrease in prices, underscoring the persistent downward momentum. This declining pricing environment reflects a predominantly negative sentiment, driven by oversupply, weak demand, and lower crude oil prices, maintaining a consistent bearish trend throughout Q2 2024.
South America
In the second quarter of 2024, the Brazilian naphtha market experienced a notable decline in prices, primarily influenced by the availability of cheaper imports from the USA. This trend was further exacerbated by a broader selloff in risk assets and a stronger US dollar, which impacted crude oil benchmarks. The demand for naphtha in Brazil remains strong, driven by its use as a feedstock in the petrochemical industry, particularly for the production of ethylene and propylene. growth. Overall, while the Brazilian naphtha market faced downward pricing pressures in Q2 2024, the underlying demand and strategic imports are likely to provide a stable outlook for the remainder of the year.
For the Quarter Ending March 2024
North America
In the first quarter of 2024, the North American Naphtha market witnessed significant fluctuations influenced by various factors. Global crude oil market instability, geopolitical tensions in the Middle East, and anticipated production cuts by oil-producing countries played a crucial role in driving up international crude oil prices during the previous quarter.
These developments motivated refineries to actively explore profit opportunities. Consequently, Naphtha prices in the US market experienced an upward trend, even though demand showed a decline. Interestingly, despite the overall decline in demand, there was a notable increase in Naphtha demand driven by the robust expansion of the US manufacturing sector. Additionally, recent reports from the Energy Information Administration indicated a reduction in US crude oil imports.
However, it is worth mentioning that the market also faced several shutdowns or disruptions, which, combined with a surge in inventories, contributed to a decline in crude oil crack prices. This decline subsequently led to lower production costs and further reduction in Naphtha prices. As a result, the Naphtha monthly price in the USA witnessed a 12.2% increase during the quarter, from USD 558 /MT to USD 626/MT. By the end of the quarter, the Naphtha weekly price in the USA reached USD 635/MT FOB Texas.
APAC
In the APAC region, recent surges in Naphtha prices have been driven by multiple factors. Geopolitical tensions in the Middle East, particularly the attacks on vessels in the Red Sea by Yemen's Houthi rebels, caused import prices to spike, resulting in increased Naphtha prices in Japan. Despite a global downward trend in the Naphtha market, Japan experienced Incline in prices due to increased demand and limited inventory levels. Although major plant shutdowns were not reported, various disruptions in the market further impacted prices. These disruptions, coupled with reduced demand and surplus inventory levels, contributed to the overall increase in Naphtha prices. In the upstream market, international crude oil prices fluctuated and ultimately trended upwards during the week. Hawkish signals from the Federal Reserve, indicating a delay in interest rate cuts, added to market uncertainty and dampened confidence. Naphtha futures followed suit, reaching levels not seen in a year, driven by growing concerns over potential supply disruptions stemming from escalating tensions in the Middle East. The sinking of the UK-owned cargo ship Rubymar in the Red Sea, resulting in significant spillage of fertilizers and oil due to an attack by Yemen's Houthi rebels, further exacerbated the situation. The spike in Asian demand, particularly in South Korea, can be attributed to an improvement in cracker demand. Recent increases in ethylene and butadiene prices have boosted margins and heightened the demand for naphtha, leading to higher utilization rates in South Korean crackers. This surge in demand has added to the upward pressure on naphtha prices in the South Korean market.
Europe
The demand for Naphtha in Germany has continued to rise steadily. In this quarter, the German market experienced a significant 4% increase in Naphtha prices compared to the previous quarter. This surge can be attributed to bullish sentiment prevailing in the European market, favourable trade dynamics favouring exports, escalating insurance premiums, and rising prices of downstream products. Additionally, the simultaneous uptick in international crude oil prices prompted refineries to actively pursue profit opportunities. Despite the considerable volatility witnessed in the international crude oil market, which provided cost support to the Naphtha market, there was a lack of substantial positive developments for the local refining Naphtha terminal. The latest reported weekly price of Naphtha CIF Hamburg in Germany for the first quarter of 2024 stood at USD 721/MT. Furthermore, the occurrence of multiple shutdowns during this period also contributed to the price hike and played a role in the overall surge in prices.
MEA
During the first quarter of 2024, the pricing of Naphtha in the MEA region remained volatile due to several factors. Fluctuations in crude oil prices had a direct impact on the pricing of naphtha, contributing to the volatility. Geopolitical tensions in the region also posed operational challenges to the production and supply chain of naphtha. Saudi Arabia, a major naphtha producer in the region, experienced a decline in supply due to geological disruptions in Middle East. This led to an increase in Naphtha prices in the country, which was further exacerbated by high demand from the downstream polymer sector. The pricing trend in Saudi Arabia during the first quarter showed a moderate positive correlation with crude oil prices, with a correlation coefficient of 0.56. Compared to the same quarter of the previous year, naphtha prices in Saudi Arabia increased by a significant 14%. These disruptions, combined with increased demand and the impact of crude oil prices, contributed to the overall volatility in naphtha pricing during the first quarter of 2024. In conclusion, the pricing of naphtha in the MEA region, particularly in Saudi Arabia, during the first quarter of 2024, was influenced by various factors, including fluctuations in crude oil prices, geopolitical tensions, supply disruptions, and increased demand. The current weekly pricing for Naphtha FOB Jeddah in Saudi Arabia is USD 677/MT.
South America
In the Brazilian market, the pricing dynamics of Naphtha have notably trended downwards throughout this month. This decline was primarily influenced by the availability of cheaper imports, particularly from the USA, where Naphtha prices experienced a decrease. The resulting increased import costs in Brazil directly correlated with this downward movement. Despite a contraction in Brazil's manufacturing sector, attributed to a decline in new orders, there is an optimistic outlook for the future, with companies considering expanding their workforces, indicating resilience and growth potential within the industry. Moreover, despite increases in crude oil prices in the upstream market, naphtha prices in Brazil have remained unaffected, highlighting the market's stability. Additionally, in the downstream market, although prices of benzene have risen, there has been no discernible impact on naphtha prices. Similarly, the prices of propylene have remained relatively stable with a slight incline, suggesting consistent purchasing patterns within the Brazilian market. This stability can be attributed to a decline in demand paired with a steady supply of naphtha, effectively balancing market conditions and preventing significant price fluctuations. Overall, the equilibrium between demand and supply has contributed to the observed stability in naphtha prices in Brazil.
For the Quarter Ending December 2023
North America
The North American Naphtha market experienced a decline in quarter in Q4 2023, with a few noteworthy developments. Firstly, the market saw a decline in global Crude Oil prices, which led to a decrease in the cost of Naphtha's essential feedstock, making production more cost-effective. Secondly, the market experienced a steady demand for the product, with no significant fluctuations throughout the quarter.
Finally, there were concerns among traders regarding the Federal Reserve's ability to control inflation, which contributed to a decline in oil prices. The USA experienced the most significant changes in Naphtha pricing during the quarter, with a 1% decrease in prices compared to the previous quarter and a 6% decrease compared to the same quarter in the previous year.
The price trend for USA in Q4 2023 was bearish, with a stable supply but a potential increase in upstream Crude Oil prices. The demand remained stable, but there may have been challenges in exports due to transportation barriers resulting from snowfall. The quarter ended with a Naphtha FOB Texas price of USD 568/MT. No plant shutdowns were reported during this period.
APAC
The APAC region's Naphtha market witnessed a mixed Q4 2023 with internal market dynamics effectively mitigating external factors such as crude oil price changes. The dip in crude oil prices was primarily due to the influx of cheaper product imports from overseas, coupled with the global decrease in the cost of feedstock crude oil. However, the Japanese Naphtha market experienced a notable 1.5% increase in prices in Q4 2023 when compared with the previous quarter, primarily attributed to the higher costs associated with importing the product from the US. The supply of Naphtha in the Indian market improved as the price of feedstock crude oil declined by approximately 4.9%. The price of Naphtha in the Chinese market experienced a marginal decrease of approximately 1%. OPEC crude oil exports have risen by approximately 1 million barrels per day since hitting a low point in August, somewhat alleviating supply constraints resulting from heightened geopolitical tensions in the Middle East. The Naphtha prices in Japan during Q4 2023 saw an inclining trend with a seasonality factor. The correlation analysis showed that the prices were correlated with the crude oil prices. The primary reason for the price increase in Japan was the higher costs associated with importing the product from the west. The latest settled prices of Naphtha CFR Tokyo in Japan at the quarter ending December 2023 was USD 653/MT.
Europe
The European Naphtha market witnessed a bearish trend during Q4 of 2023 due to high supply and low demand from downstream toluene industries. The market observed a surplus in supply coincided with diminished demand, maintaining an average hoarding sentiment. The feedstock Crude Oil price fluctuated during the quarter, which may affect the product price, and there may be challenges in exports due to transportation barriers resulting from snowfall, which further impacted Naphtha demand. The trend analysis revealed a bearish market situation with low demand and high supply, and a 12% decrease in price from the previous quarter. Dec 2023 Naphtha FOB Rotterdam in the Netherlands was USD 590/MT. Overall, the bearish trend in the European Naphtha market was driven by high supply and low demand, transportation barriers, and fluctuations in crude oil prices.
MEA
In the fourth quarter of 2023, the Naphtha pricing trend in the Middle East and Africa (MEA) region experienced a consistent upward trajectory. Three main factors contributed to this market shift: a reduced supply of Naphtha due to OPEC+ cuts from Saudi Arabia aimed at increasing the value of feedstock crude oil, moderate demand from the downstream petrochemical industry, and expectations of an uptick in upstream crude oil prices. Saudi Arabia saw noteworthy price fluctuations, witnessing a healthy market trading activities along with uptick in the market purchasing activities. Despite this, the overall market situation in Saudi Arabia remained bullish, with a stable Naphtha supply throughout the quarter. The demand for Naphtha in Saudi Arabia was moderate, driven by heightened demand from the downstream polymer industry.The pricing trend in Saudi Arabia exhibited an upward inclination, and there were no reported plant shutdowns during the quarter. Comparing prices to the same quarter of the previous year, there was a 15% increase, while the change from the previous quarter was 12%. The percentage comparison between the first and second halves of the quarter in Saudi Arabia showed a -4% change. The closing price for Naphtha FOB Jeddah in Saudi Arabia at the end of the quarter was USD 614/MT.
South America
During the fourth quarter of 2023, the pricing trend for Naphtha in the South American region showed a consistent upward movement. In summary, the Naphtha pricing landscape in the Brazilian market demonstrated a notable increased when compared with the previous quarter. This upward trend was primarily driven by the presence of expensive imports, particularly from the USA. The escalation in Naphtha prices in the USA directly affected import costs in Brazil. However in Nov 2023 and Dec 2023, Challenges in sales, difficult economic conditions, reduced demand, and declining exports constrained factory production, leading to a decrease in new orders. Consequently, purchasing activity decreased, and inventories were downsized as the industry navigated through challenging economic circumstances. Despite the decline in prices, there are positive signs with market growth in comparison with Q3 2023. Surveys indicate that companies are contemplating expanding their workforce, suggesting resilience and growth potential within the Brazilian Naphtha industry. While December reflected a scenario of price contraction, it also hinted at the likelihood of an market recovery towards the end of the quarter.
For the Quarter Ending September 2023
North America
Throughout the third quarter of October 2023, the North American Naphtha market witnessed a period of notable volatility. In the United States, Naphtha prices followed a mixed trajectory. At the outset of the quarter, prices experienced a decline of approximately 2.3%. This drop was primarily attributed to diminished demand from the downstream petrochemical industry, which resulted in excess supply. Consequently, manufacturers faced considerable shipping pressures, leading to an accumulation of inventory in various enterprises and contributing to a bearish price trend. However, the latter two months of the quarter saw a significant rebound, with Naphtha prices increasing by around 14% and 8%. This increase was closely tied to a sharp rise in the price of the feedstock, Crude Oil, which surged by approximately 24% in the US market. The heightened cost of feedstock Crude Oil had a noticeable impact on the overall production expenses for Naphtha. Furthermore, global Crude Oil prices remained on an upward trajectory due to supply constraints. Saudi Arabia and Russia extended voluntary oil output reductions by 1.3 million barrels per day (bpd) until year-end, leading to a substantial spike in global crude prices, reaching a 10-month high. In addition to these market factors, a significant incident occurred at the Marathon Petroleum refinery near the Mississippi River during the quarter. Two massive Naphtha storage tanks on the refinery's south side erupted in flames due to a Naphtha leak, resulting in the release of a voluminous plume of black smoke that spread over the surrounding predominantly rural region, located 38 miles (67 km) west of New Orleans. This incident had a notable impact on the supply chain for Naphtha, as the affected refinery played a pivotal role as a producer and supplier of the product. Consequently, the reduction in production or potential shutdown necessitated by the incident led to a shortage in Naphtha supply, exerting upward pressure on prices in line with the fundamental principles of supply and demand.
Asia
In the third quarter of 2023, the Asian Naphtha market displayed a significant degree of volatility, with the Japanese market experiencing mixed price movements. At the beginning of the quarter, Naphtha prices dipped by approximately 1%, primarily due to the influx of cheaper imports from overseas and reduced demand from the downstream petrochemical sector, resulting in an oversupply situation. Consequently, manufacturers grappled with shipping challenges, leading to inventory build-up across various enterprises and contributing to a bearish price trend. However, the latter two months of the quarter saw a remarkable upturn in Naphtha prices, with increases of around 16% and 10%. This upsurge can be attributed to the broader trends in the international crude oil market, which maintained an upward trajectory. A crucial factor driving this trend was the ongoing production cuts enforced by major oil-producing nations, particularly Saudi Arabia and Russia, creating concerns about supply levels. While the demand for Naphtha remained stable, the Japanese market faced constraints due to tightening domestic supplies. These combined factors generated a bullish outlook for Naphtha prices, ultimately leading to the observed price surge over the course of this period.
Europe
In the third quarter of 2023, the European Naphtha market experienced a bullish trend, with Germany standing out as it witnessed a substantial price increase of approximately 23.5%. This surge in prices was primarily attributed to supply chain disruptions caused by a decrease in the number of Naphtha cargoes from the USA. The disruption was closely tied to elevated spot prices of refined products on the US West Coast, driven by concerns about Hurricane Hilary's potential impact on refinery operations in Southern California. Precautionary measures and reduced production capacity were taken in response to this impending weather event. Another factor contributing to the supply chain disruption was an unprecedented drought situation at the Panama Canal, leading to navigational challenges for vessels and reduced goods transportation. The Panama Canal Authority responded by imposing a premium on the passage of larger ships, further exacerbating the transport of goods. Combined effects of disrupted supply chains raised concerns of potential product shortages and increased prices. This trend was also influenced by declining regional stocks and sustained exports that supported the market. Gasoline exports from Europe saw a significant decline in August, particularly to North America and West Africa. Naphtha imports from the USA became more expensive due to a notable incident at the Marathon Petroleum refinery near the Mississippi River, leading to supply shortages and price increases in the USA Naphtha market. Furthermore, Crude Oil prices continued their upward trajectory due to investor focus on supply constraints, despite prevailing macroeconomic uncertainties. Key oil-producing nations, Saudi Arabia and Russia, extended their voluntary oil output reductions by 1.3 million barrels per day (bpd) collectively until the year's end, resulting in a substantial increase in global crude prices, reaching a 10-month high during the quarter. The combination of these factors made the third quarter of 2023 a period of significant volatility and disruption in the European Naphtha market.
South America
During the third quarter of 2023, the South American Naphtha market experienced a significant shift in market dynamics. In the initial month, a noteworthy bearish trend was observed, largely influenced by the escalating prices of Naphtha in the USA, a critical supplier to Brazil, which heavily relies on imports of this essential product. Brazil's dependency on imports was further accentuated by its intention to import an unprecedented quantity of Russian fuel during this period, solidifying Moscow's status as the leading supplier to the Latin American nation, especially after the European Union imposed a ban on Russian imports. Imports of Russian petroleum products were projected to surge by 25% from July, reaching an impressive daily volume of around 235,000 barrels, surpassing the United States, which was formerly Brazil's primary foreign fuel supplier. However, the latter two months of the quarter witnessed a substantial upswing in Naphtha prices. This surge in prices was intrinsically linked to a sharp rise in the cost of the feedstock, Crude Oil, which surged by approximately 24% in the US market. The substantial hike in feedstock Crude Oil costs significantly impacted the overall production expenses for Naphtha, exerting pressure on market participants. Furthermore, global Crude Oil prices followed an upward trajectory due to ongoing supply constraints. Notably, Saudi Arabia and Russia extended their voluntary oil output reductions by 1.3 million barrels per day (bpd) until year-end, contributing to a substantial spike in global crude prices, which reached a 10-month high. The confluence of these factors defined the intricate dynamics of the South American Naphtha market during the third quarter of 2023.
Middle East
In the third quarter of 2023, the Middle East Naphtha market witnessed a significant transformation in its dynamics. The quarter began with a noticeable bearish trend as naphtha prices dropped by approximately 8% in the first month. This decline was attributed to the influx of cheaper naphtha imports from Russia, which compelled Saudi Arabia refiners to procure Russian oil products at competitive rates and subsequently export their own. This situation was exacerbated by an abundant naphtha supply in the Middle East Gulf region, primarily due to weakening petrochemical demand. However, the market rebounded in the subsequent two months of the quarter, with naphtha prices surging by approximately 16% and 11%, respectively. This resurgence was closely linked to a broader international trend, where the prices of feedstock Crude Oil experienced a remarkable increase of approximately 24% during the same quarter. This surge was mainly driven by the anticipation of supply constraints, which took precedence over concerns related to slowing global economic growth and rising US inventory levels. One pivotal factor influencing the upstream Crude Oil market was the collaborative commitment of major oil-producing nations, namely Saudi Arabia and Russia, to extend their plan to reduce crude oil supply by 1.3 million barrels per day until the end of the year. The sustained reduction in production resulting from this agreement had a substantial impact, raising concerns about a tight crude oil supply in the upcoming fourth quarter. These developments underscore the complex interplay of factors affecting the Middle East Naphtha market during the third quarter of 2023.
For the Quarter Ending June 2023
North America
The prices of Naphtha in the North American market showed a decrement of 17% in the second quarter of 2023 with market situation being bearish, despite witnessing a marginal increment from downstream industry and export inquiries. This was largely due to the weak support from the upstream industries and limited purchasing activities within North America because of slow economic growth in the region. Supply remained optimal as prices of crude oil declined and energy prices stabilized, which decreased production costs as well. However, the falling construction PMI from 55.1 to 54.9 in the United States and the search for alternative feedstocks for downstream petrochemical derivatives, such as LNG further lowered the prices of Naphtha. Sales in the exports looked bleak as international demand was, which resulted in an accumulation of inventories. These unused inventories had to be sold at negotiable prices, which in turn decreased profit margins amongst traders and distributors. The final price for naphtha was assessed to be USD 568/MT FOB Texas.
APAC
The Asian market witnessed a bearish trend for Naphtha as prices declined by over 3%, due to cheap import products from Russia to East Asia. The sluggish demand from downstream industry from petroleum and petrochemical industries played a major role along with high inflationary rates, being over 5% in the region. Demand from overseas was also not healthy and production being at optimal levels due to falling prices in upstream crude oil. The weak demand of ethylene further diminished the demand for naphtha which led to an oversupplied market in addition to the excessive supply from Russia. The depreciation of naphtha was also supported by the declining prices of crude oil for the gasoline industry of naphtha was a by-product, and by the end of the second quarter prices of naphtha were reported to be lower than that of crude oil. Furthermore, the operations of steam crackers in the region, despite the increment in PMI from 49.5 to 50.9, declined because of low demand for olefines for the adhesive and rubber, food packaging and detergent manufacturing sectors. The final price of naphtha was assessed to be USD 1087/MT Ex-Hebei at the end of the second quarter of 2023.
Europe
Prices of Naphtha had declined by almost 22% with the overall market situation exhibiting a bearish trend in the European market throughout the second quarter of 2023. This was largely due to large amounts of imports from United States and Saudi Arabia and the low demand from the downstream petrochemical industries. Furthermore, the drop in the prices of crude oil lowered production costs, which led to optimum supply of material. However, the slow economy of Europe reduced purchasing activities in the domestic and international markets as the overall PMI declined from 48 to 39, which left the manufacturers to face huge inventories amidst sluggish demand. International offtakes were also not healthy, which further contributed to the accumulation of inventories. These underutilized stocks were further sold at negotiable prices which led to a further decline in prices as profit margins decreased. The final price of naphtha was assessed to be USD 598/MT CIF Hamburg at the end of the second quarter of 2023.
For the Quarter Ending March 2023
North America
In Q1 2023, the Naphtha price trend follows an upward market trend due to the improvement in demand from the downstream industry and increasing export inquiries marginally. Meanwhile, the prices of Naphtha were also affected by the shortage of stocks in the warehouse of the US enterprises this week amid high crude values. The rising demand from the European countries for US exports increased as the ban on Russian petrochemical imports was placed. Towards the end of the quarter, purchasing activities slowed down, and a gradual increase in inventories forced the producers to revise the price trend for the domestic and overseas markets.
Asia-Pacific region
In Q1 2023, the Naphtha market improved with strong market fundamentals and bullish spot purchasing activities. The strong demand for downstream ethylene drove up Naphtha costs despite the easing upstream crude oil prices in the Chinese market. Meanwhile, the price inclination was also supported by the reduction in the supplies from South Korea and other exporting countries due to rising import costs with the recent escalation in crude oil values across the globe. In March 2023, the Naphtha price in China surged to USD 1177/ton Ex-Hebei. The modest pent-up in the downstream demand was supported by the rebounding economic activity of China impacting the pricing dynamics of the product.
Europe
This quarter, the Naphtha prices witnessed a rise in purchasing activities and high market trading fundamentals. In Jan 2023, the Naphtha price in Germany surged to USD 670/ton CIF Hamburg. The prices of Naphtha in Europe increased on the back of improving demand in the downstream petrochemical sector. Despite the relatively easing upstream crude oil in the German market, the price of Naphtha rose on the back of demand exceeding supply. The demand for Naphtha from the downstream derivative market also improved, and producers elevated their product prices for the domestic and overseas markets. With the increasing Naphtha prices, the production cost of various Petrochemicals also surged, raising the sales and revenue among the ventures.
For the Quarter Ending December 2022
North America
The prices of Naphtha in the US decreased during the first month of the fourth quarter of 2022 as the production rates in the domestic market increased, raising the product availability in the domestic market. During mid-Q4, the prices of Naphtha rose as the demand from importing markets like China and Turkey improved, leading to price hikes in the American market. During the final month of Q4 2022, the prices of Naphtha decreased as upstream crude oil prices in the US, along with poor procurement attitude from the downstream petrochemical sector due to the festive season.
APAC
Weak economic conditions in China due to rising covid 19 related restrictions, the prices of Naphtha in China fell during the first month of the fourth quarter of 2022. As the restrictions eased, the high competition for Naphtha imports in the Asian markets increased Naphtha costs in China during mid-Q4 2022. The final month of Q4 2022 saw a reduction in Naphtha prices as a result of easing export prices from the USA due to bad purchasing behavior on the part of the downstream petrochemical industry because of the holiday season. In the steady performance of the downstream monomer market, the price of Naphtha increased during the first two months of Q4 2022 and decreased during the final month on the back of destocking activities.
Europe
The poor demand from the downstream petrochemicals industry, along with a strong supply of upstream crude oil, abetted the declining price trend of Naphtha in Europe during the first month of Q4 2022. The steady supply of Naphtha from North African countries further eased the cost of Naphtha. However, during mid-Q4, the demand for North African Naphtha cargoes rose in Asian countries, which led to the Naphtha costs increasing in Europe despite the average performance of the downstream petrochemical industry. During the final month of the fourth quarter of 2022, the prices of Naphtha in Europe decreased again due to the weak buying sentiments in the European region caused by the festive season.
For the Quarter Ending September 2022
North America
The cost of Naphtha in the US has witnessed a steady decline throughout the third quarter of 2022. Natural gas is the usual feedstock for crackers in the US refineries, and natural gas prices in the US were low during Q3 2022, leading to further easing the demand for the alternate feedstock Naphtha in the domestic market. Increased production rates to meet the European demand and a disruption in one of the largest export units eased Natural gas costs driving down the price of Naphtha in the USA. The price of Naphtha in the US was around USD 647/MT Naphtha FOB Texas at the end of Q3 2022.
APAC
The Naphtha prices in the Indian market decreased steadily throughout the third quarter of 2022 owing to the poor performance of the downstream plastic and polymer industries. Due to the negative cracker margins during Q3 2022, the demand for Naphtha was very weak, leading to the easing of naphtha prices in India. The Naphtha prices in China dropped during the third quarter of 2022 at the start but witnessed a hike during the last month of Q3 2022. The weak cracking margins were the reason behind the price drop, whereas the increasing demand for downstream toluene abetted the price hike nearing the end of Q3. At the end of Q3, the cost of Naphtha was recorded around USD 1224/MT Hydrogenated Naphtha Ex-Hebei.
Europe
The prices of Naphtha in Europe were pretty stable, with minimal fluctuations during the third quarter of 2022. The stable price trend is the steady demand for Naphtha as a feedstock due to the high costs of alternate feedstocks like Natural gas caused by the energy crisis in Europe. The increased demand during Q3 2022 was met with strong export levels from the middle east and African countries like Algeria, leading to a stable price trend throughout the third quarter of 2022. The price of Naphtha in Germany during the end of Q3 2022 was recorded at around 918/MT Naphtha CIF Hamburg.
For the Quarter Ending June 2022
North America
The price of Naphtha increased in the American market during the start of the second quarter of 2022 was USD 924/MT. Since America doesn't utilize Naphtha as a feedstock for refineries like most other markets, the primary downstream demand for Naphtha in America is for gasoline blending. Similar to the European markets, the cost of Naphtha started to decrease in the latter half of the second quarter of 2022. The price rose in the first half of Q2, owing to the global supply disruption of upstream crude oil due to the ongoing conflict between Russia and Ukraine. The drop in prices during the latter half is because of very poor competition and demand for Naphtha from Asian and European refineries.
APAC
The price trend of Naphtha in the Chinese market was decreasing throughout the second quarter of 2022. The steady and cheap supply of upstream crude oil from Russia is due to the ban sanctioned by the West on Russian imports as an act against Russia for Moscow's invasion of Ukraine. The sanctions forced Russia to find a new consumer base for its crude, and China is one of its major new importers. The price of Naphtha in the Chinese market during the last month of the second quarter of 2022 was recorded at around USD 1186/MT. The negative cracking margins due to poor demand also led to Naphtha's decreasing price trend in various Asian markets. In India, at the end of Q2 2022, the price of Naphtha was around INR 66490/MT.
Europe
The price of Naphtha in European markets rose on the back of the sanctions imposed by several European countries against Russian imports. Europe was depended on Russia for 50% of its Naphtha requirements, so the ban on Russian imports hiked the prices of Naphtha in Europe drastically. The cost of Naphtha on the German market was around USD 930/MT during the start of the second quarter of 2022. The price trend of Naphtha started to dip while nearing the end of the second quarter of 2022 due to higher run rates of refineries on the continent, and the production of Naphtha rose. Increased supply from Algeria and weak competition from the Asian market because of poor demand brought down the demand and price of Naphtha during the end of the second quarter of 2022.
For Quarter Ending March 2022
North America
The American Market for Naphtha in the first quarter of 2022 had a sharp rise in prices owing to surged prices of upstream crude oil which was a consequence of increased geo-political risk situation (Russia-Ukraine war) and uncertainties revolving around the sanctions against Russia by the US and EU. At the end of the first quarter of 2022, the price of naphtha in US was recorded at USD 1007/MT Naphtha FOB Texas (USA). On March 8th the United States decided to stop various imports from Russia leading to higher prices for naphtha and upstream crude oil. Many American companies running in Russia stopped their production in Russia putting additional upward pressure on the prices of Naphtha and upstream crude oil in the United States during Q1 2022.
Asia Pacific
The Prices of Naphtha were down in the Indian Market in the first quarter due to very low demand from the crackers as a feedstock since LPG was available in discounted price from Russia on the account of the Russian-Ukraine conflict. In the Chinese market, the price was on an upward trend for the whole Q1 of 2022 due the recent surge in covid cases in China which halted production operations. The South Korean market also had a hike in naphtha prices due to high demand from downstream medical sector and limited imports from China. The price of naphtha at the end of Q1 2022 were recorded at USD 1363/MT for Naphtha FOB China, respectively.
Europe
The European petrochemical industry was hammered due to the energy crisis in the first quarter of 2022 on account of ban on Russian oil by several European countries. Europe being the largest plastic consuming community the demand for downstream for products like downstream polyethylene (PE) and polypropylene (PP) is high in Europe. The energy crisis also led to various suspension of few petrochemical refineries and the import of the upstream crude oil has been disrupted owing to the sanctions. All the above-mentioned factors have contributed to increased Naphtha prices in Europe during the first quarter of 2022. USD 1001/MT Naphtha CIF Hamburg (Germany) was the price of Naphtha in the German market during the end of the first quarter of 2022.
For the Quarter Ending December 2021
North America
US naphtha prices saw an increase of 11.7% from the Q3 prices helped by higher natural gas prices which narrowed the premium over LPG during Q4 of FY21. The trans-Atlantic propane arbitrage margins were tight owing to higher propane prices in Europe as LPG stocks were diverted towards fuel use rather than as reformer feedstock. Spot export prices assessed on an FOB US Gulf basis stood at 724 USD/MT for Q4. Demand for Naphtha is expected to increase going into Q1 of FY22 as the increasing trend in Natural gas prices will create higher demand for naphtha as cracker feed. Feedstock crude prices as expected could be remarkably high throughout Q1 which may exert further upward pressure on the prices of Naphtha in the new year. A lot of Naphtha’s performance, however, depends on the performance of LPG, as higher demand for LPG could compel refiners to opt for Naphtha if its premium over LPG narrows down during Q1 of FY22.
Asia
Naphtha prices in China posted an increase of 8% in Q4 from the Q3 prices as demand from the downstream propylene industry remained strong throughout. Lower arbitrage margins for imports of propane from the US and the middle east also helped support naphtha prices during the quarter ending December. India’s domestic prices had seen a 14% decrease from the previous quarter assessed on an Ex-Works Panipat basis as LPG arbitrage margins from the Middle East softened during the same period. The average Ex-Refinery prices of naphtha in India for Q4 (calendar year) were assessed at INR 66285/MT at Panipat and INR 69335/MT at Kochi.
The outlook for Naphtha in Q1 of FY22 remains positive as Naphtha is likely to continue as the preferred cracker feed over ethane and propane for the new year. Naphtha futures for February and March had fared higher expecting higher crude prices in the first quarter.
Europe
European naphtha market in Q4 ended on a strong note as higher margins from crude combined with stronger demand from gasoline blending and lesser imports had helped close FY21 on a high. The premium of Domestically sourced naphtha assessed on an FD Hamburg basis over imports of naphtha assessed on a CIF ARA basis had narrowed to a quarterly low by mid-December helping refineries squeeze margins of around 5 USD per barrel of crude. Propane stocks were diverted as an energy source for refineries rather than being used as a cracker feed due to higher natural gas prices throughout the second half of FY21.
The outlook for European Naphtha market remains positive for first quarter of FY22 as rising natural gas and crude prices could prompt refineries to prefer naphtha over LPG as the key cracker feedstock. The severity of winter across Europe could also determine the performance of naphtha in Q1 as LPG demand rises during peak winter as heating fuel impacting both the price and availability to the steam crackers.
For the Quarter Ending September 2021
North America
Firm crude prices in the global market augured well for the Naphtha prices which remained strong during the 3rd quarter. Mid-quarter hurricanes Id and Nicholas sent shock in the feedstock market where hurricanes shunned total output by more than 90 percent at one time, however, the feedstocks output came gradually to stable levels within weeks. Naphtha prices spiked in late August and early September and measured at USD 670 per MT. Refiners improved operating rates after the damage assessment in the aftermath of turmoil left by hurricane Ida which devastated the southern states where most of the key refineries were located. Furthermore, severe conditions also halted the trade between USA and Asia in the Gulf region as the US forms a key supplier of Naphtha to Asia.
Asia Pacific
The Asian Naphtha market started the quarter on a decline as the crude prices dipped after surging in June. However, the Asian market rallied after the slumber of early July and pricing again took an upturn where CFR Japan prices crossed USD 700 per MT mark in Late July. Resurgence in the prices of Naphtha in the 3rd quarter came in the backdrop of firm crude prices and a significant decline in crude production in the US Gulf due to Hurricane Ida. Demand also showed an increase as the key Asian economies moved towards economic recovery after containing delta variant cases.
Europe
The supply has been termed as tight for quarter III in Europe where demand for Naphtha witnessed a substantial increase as market participants moved from costly LPG to Naphtha. Tight supply also meant that there was a decreased flow of arbitrage of Naphtha from Europe to Asia. Furthermore, firm crude prices kept upward pressure on the prices of Naphtha in major European markets. Prices of Naphtha in major European markets were assessed in the range between USD 650 -700 per MT between Aug-Sep.
For the Quarter Ending June 2021
North America
During the second quarter of 2021, the overall Naphtha output by the US refineries improved as several crackers in the US Gulf region were seen ramping up run rates after the winter storm Uri affected production levels in Q1. As per the EIA report, net U.S. Naphtha production for petrochemical feedstock usage surged to 6.08 million barrels in April 2021. As the regional industrial infrastructure showed better efficiency backed by strong enquiries for petrochemical intermediates, the domestic Naphtha market reported improved dynamics in the North American region. Even though the prices of Brent Crude observed continuous hike in the North American market, Naphtha prices showed some ease during the second quarter of 2021. FOB Texas discussions were assessed at USD 882 per tonne in June.
Asia Pacific
Demand outlook in the Asia Pacific region remained uncertain during the second quarter of 2021 as resurgence of new virus variants restricted operations in the key economies like India. Temporary closure of Naphtha crackers in South Korea curtailed the regional availability by a significant amount. However, the pricing trend continued to remain well supported by strong gains in the international crude oil. Several downstream players procuring Butadiene and Ethylene reported increasing feedstock spreads with Naphtha. While the commissioning of new crackers kept the supplies ample in the Asian Market, the fall in olefins margins caused several reductions in the operating rates. Indian Naphtha pricing discussion settled at USD 1035 per tonne FOB Kochi in June.
Europe
During the second quarter of 2021, European Naphtha supplies were uplifted with the influx of US shipments from the US Gulf coast. In June, around 375,000 tonnes of the US Naphtha imports were estimated to arrive in early June, the highest in the past four years. Surged Naphtha volumes in Europe opened the regional arbitrage with the Asia Pacific region. Demand from the gasoline blenders was reportedly less in June which further pushed the margins of European refiners. In hopes of better netbacks, some European refiners were heard directing some cargoes to east of Suez from the outlets in northwest Europe (NEW) and the Baltic.
For the Quarter Ending March 2021
North America
For more than half of Q1, Naphtha supplies remained tight in the North American region, as various US-based crackers of INEOS, LANXESS, DOW Chemicals, Oxy Chem etc., were shut down amid the unprecedented freeze weather condition in the US Gulf coast and some parts of Louisiana. The demand however, hiked from the downstream petrochemical sectors. Surged demand and sluggish supply scenario inclined the prices of Naphtha, taking CFR-New York prices in March to around USD 960/ton. Towards the end of Q1, a steady increase could be observed in the crude throughput rates by Gulf coast which meant improved naphtha production.
Asia-Pacific (APAC)
Naphtha supplies in the region were balanced, due to the restart of new crackers in China. However, a major plant turnaround was noted in South Korea, which was further translated into widened supply-demand gap of Ethylene. Reduced overseas imports put forth supply related constraints in front of the suppliers. However, demand remained upbeat as several Chinese buyers were heard filling their inventories before the Chinese Lunar New Year. The tight southeast Asian market could sense some ease with Thai PTTGC starting its 500 KTPA Naphtha Cracker in early January. Due to production cuts in crude oil by OPEC nations, Naphtha prices took an uptrend with quarterly average standing at USD 848/ton CFR India.
Europe
The supplies remained tight as the winter season hit the region and several plants in the northwest Europe reduced their production efficiencies. In January, nearly 5.2 million barrels of gasoline was exported to the US, with nearly 680,000 barrels booked in advance for February. Regional demand remained high due to the surge in demand for propane and butane for heating purposes as the winter season hit the northwest European region. Strong domestic and export demand hiked the prices of Naphtha by 70 USD/ton during the quarter while the quarterly average stood around USD 590/ton.
For the Quarter Ending September 2020
North America
In contrast to the market fundamentals of Naphtha across the globe, saturated US market has made light Naphtha dive to its lowest level in the first week of September from June. As the force measure caused by Hurricane Laura negatively affected the export margins of various oil refiners, market players eyed to make up for their loss by catering to the large export demand in late September. However, few players showed resistance towards voyages to Asia due to the volatile freight charges in the region.
Asia
Supply remained tight in the third quarter of 2020 against the backdrop of lower deep-sea arbitrage from west followed by several refinery turnarounds in the US due to spate of seasonal Hurricanes. However, in the second half of the quarter, supply considerably eased as crude oil futures tumbled to astonishing lows amid narrowed fuel demand under consistent increment in coronavirus cases across the globe. Demand for light Naphtha utilized in manufacturing of olefins remained stable to firm while that of heavy Naphtha crippled on the back of volatility in the aromatics sector. Demand pattern was articulated when spot cargoes for light Naphtha achieved premium whereas heavy grade Naphtha received appreciable discounts. Naphtha’s crack spread in Asia traced a downward trajectory from USD 62.73 per tonne to USD 56.60 per tonne in the beginning of August.
Europe
Naphtha values firmed in the second half of the third quarter supported by tight supply from western countries on the backdrop of logistics disruption due to US hurricanes. In addition, cuts in the operating rates balanced the supply fundamentals and aided is maintaining the inventory levels. Prices of Naphtha in Europe averaged around USD 951 per tonne, with a rise of 1 per cent since July. Limited imports from the US provided room for European manufacturers to extend their profit intakes amidst widened demand and supply gap. However, supple inflows of cargoes from Russia and reduced arbitrage from Asia marginally pressurized the market fundamentals in late September.
