Asia's naphtha crack hit a three-and-a-half-week high of $56.95 a tonne, supported by comparatively weak Brent crude which fell below $49 a barrel. But naphtha supplies were still in excess and this was reflected in the inter-month outright prices being in a 'contango' state, which started on July 6. Contango usually refers to an oversupply market where the front-month price falls below that of the following month.

The current Asian naphtha front-month price for first-half September naphtha is $1.50 a tonne lower than the value for first-half October. Asia's naphtha glut, however, appeared to have eased versus last week, as fewer European cargoes are expected to arrive in Asia in September, with the current discount levels to Japan quotes for spot naphtha making it unattractive for sellers.

Some 1.3 million tonnes of naphtha were booked for Asia arrival this month and similar volumes will follow for August arrival. This is 18 percent higher than the monthly average in 2016. Japan imported 1.04 million tonnes of naphtha in June, down nearly 7 percent versus May, and in line with lower ethylene output in June compared to last month.

Mitsui Chem has an ongoing maintenance at its 612,000-tonne-per-year (tpy) cracker which started on June 20 and will last until August 2. Asia's gasoline crack was at a four-session high of $9.81 a barrel, mirroring the overnight strength in the European market.

Copyright Reuters, 2017