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Japan Naphtha Front-Quarter Time Spread Backwardation Steepens

OIL PRODUCTS

Elevated near-term supply concerns in the past week, coupled with a bearish outlook for Q3, will likely drive the Japan naphtha front-quarter time spread to its highest monthly average since July 2022, Platts said.

  • As of March 19, the Platts CFR naphtha Q2/Q3 derivative time spread was averaging $26.02/mt month-to-date. This is up 27.81% from February’s average.
  • Strength in the Asia naphtha complex in Q1 appears to continue into Q2 amid supply-side concerns.
  • Demand in the Asian naphtha market was supported by strong buying appetite from South Korea and Japan for H2 April and H1 May.
  • Tightness in Europe was adding further support.
  • However, demand for naphtha as a steam cracking feedstock is projected to decline amid the upcoming cracker maintenance season.

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