In our latest naphtha market commentary:
> Global physical and paper naphtha markets are diverging, with the East/West spread at year-to-date highs, though a reconciliation between paper and physical is anticipated soon
> Asian cash differentials are declining, while global cracks and time spreads are hitting a ceiling
> Despite a drop in buy-side activity due to China’s Golden Week, there were several LR fixtures from the Arab Gulf and India to Japan, where naphtha inventories are significantly below historical averages.
> Number of open Med-NE Asia arbs are diminishing, and Asian steam cracker margins are softening, likely reducing petrochemical consumption
> Despite heightened tensions in the Middle East, eastbound arbitrage via the Cape appears unviable through year-end, indicating a lack of urgency for resupply
> A decline in TC2 freight rates is attempting to revitalise the Rotterdam-New York Harbor route, but profitability depends on whether Rotterdam FOBs can adjust to forecasted freight increases, amid a less favourable outlook for European gasoline demand
