- Lower profit margins due to low demand for plastics- The paper market expands into
contango





According to sources, market participants
expressed bearish sentiment in Asia naphtha markets on Aug. 16 due to weak demand
for downstream plastics. Bearish sentiment was also evident
in the paper market, with brokers pegged September-October Mean Japanese naphtha
Swap Timespread at minus 3.25-4.50/mt during afternoon trade on Aug. 16, down
$1.25-2.50/mt compared to the Aug. 15 close of minus 2.25-2.50/mt. The CFR
Northeast Asia ethylene/ CFR Japan naphtha spread, closely monitored by
petrochemical manufacturers, narrowed to $136.00-150.50/mt over the week. This
was at the Asian close on Aug. 15. Since May 13, the spread was below
the $250-270/mt minimum breakeven point for integrated producers who make
ethylene from naphtha. A Southeast Asian petrochemical manufacturer
stated that if the prices of...