The Asian naphtha price rebounded from a 5-1/2 week low to end the week at a two-session high of $938.50 a tonne, while its margin has also recovered from a 2-1/2 week low to $122.13 a tonne supported by demand. Malaysia's Titan bought around 30,000 tonnes of naphtha for February 1-5 delivery at premiums of about $10 a tonne to Japan quotes on a cost-and-freight (C&F) basis. "The stronger naphtha market today is also due to LPG prices having recovered after a brief fall," said a Singapore-based trader.

LPG, or liquefied petroleum gas, can be used to replace a small portion of naphtha feedstock in some Asian naphtha cracking complexes. But for most of this year, petrochemical makers relying heavily on just naphtha because of costly LPG, where supplies tightened due to the sanctions against Iran. This week, LPG prices fell below $1,000 a tonne for the first time in many months, raising buyers' hopes of a cheaper alternative in the market over naphtha.

Copyright Reuters, 2012