In our latest naphtha market commentary:
> Despite recent correction in naphtha flat prices, time spreads and cracks, the global naphtha complex remains historically strong in the near term
> TC2 and TC14 expected to trade sideways given vessel supply is within seasonal averages, meaning freight cannot be counted on to keep naphtha arbs open sustainably
> Asian cash diffs are softening again despite peak manufacturing season as regional steam cracker margins drop below breakeven levels
> FOBs will have to relied upon to reopen arbs sustainably, and are more likely to do so in the back half of Q4 after maintenance subsides and ad valorem selling kicks in
> Prolonged maintenance at Star refinery from September to threaten Aliaga’s status as cheapest landed barrel into northeast Asia
> Heavy refinery maintenance through end-October expected to narrow E/W spread closer to historical norms
> Recent USGC FOB strength seen as short-lived, likely due to shortfall of prompt feedstock in LatAm, reported export terminal issues
