For the Quarter Ending September 2021
During the 3rd quarter of 2021, the prices of Heavy Aromatic Naphtha have been on an uptrend owing to an increase in prices of crude oil. The OPEC+ decision to cut down production of crude had specifically impacted the availability of heavier crudes which are crucial for greater outputs of Naphtha. Refinery shutdowns in the US Gulf coast during the hurricane season had further impacted supply and led to a sharp spike in prices during the month of September. No immediate relief in prices can be expected as the prices of crude continue their upward surge even into Q4.
In the Asia Pacific region, the overall market outlook of Heavy Aromatic Naphtha showcased an upward trajectory in Q3 2021. An upturn in the prices of Heavy Aromatic Naphtha during the 3rd quarter came in the backdrop of firm crude oil prices in the Chinese domestic market. Demand also increased as the key Asian economies recovered after containing delta variant cases. Increased price for crude oil remained in the Asia Pacific region backed by active purchases by the downstream sectors supported the uptrend in bulk pricing.
The European market witnessed a substantial rise in the pricing trend of Heavy Aromatic Naphtha in Q3 2021 on the back of increasing crude oil prices across the region. In terms of supply, it has been termed as tight for Q3 in Europe where demand for Naphtha witnessed a significant rise as market participants moved from costly LPG to Naphtha. Tight supply also meant that there was a decreased flow of arbitrage from Europe to Asia. Furthermore, firm crude prices kept upward pressure on the prices of Heavy Aromatic Naphtha solvent in major European markets.
For the Quarter Ending June 2021
Supplies improved in the North American region as manufacturing units sensed recovery from the devastating impact of the winter storm Uri in Q1. Several refiners were heard operating at optimum rates after downstream players resumed production in the US Gulf region. Offtakes from several downstream industries picked up due to the production hinderance incurred in the previous quarter, while some were seen actively stockpiling the material due to the upcoming hurricane season in USA. sentiment for the procurement of large volumes strengthened among the spot buyers. As a ripple effect, the pricing trend remained buoyed throughout the quarter in the North American region.
Due to surge in COVID cases in India, petrochemicals demand in Southeast Asia remained dull for a larger part of Q2 2021. Despite slowness in market activities, Heavy Aromatic Naphtha prices witnessed marginal gains on the back of firm values of upstream crude oil. China imposed consumption taxes on the imported heavy aromatic commodities which further curtailed the margins of the local manufacturers. High demand from the octane blend stock market was reported in China due to sharp economic rebound. Demand from the solvent sector was reportedly firm in India. The average quarterly price of Heavy Aromatic Naphtha Ex-Works pricing in June settled at USD 3806 per tonne.
During the second quarter of 2021, Heavy Aromatic Naphtha solvent supplies in the European region were tight due to high consumption by petrochemical and gasoline blending users in the regional market. Supply conditions were improved over the last quarter as several producers in the Middle East restarted production and import volumes from the US improved in the second quarter. Mass vaccine rollout improved the material movement in the European region. As a result, offtakes from the downstream petrochemical manufacturing units and gasoline blending sector surged.
For the Quarter Ending March 2021
Naphtha supplies in the region were constrained throughout the first quarter, due to shut down of several refineries in the region as the rigorous freeze weather in the USA Gulf region forced production units to shut for indefinite period. The demand slump in the mid-quarter due to curtailed refinery operations while export volumes dropped significantly to the Asian and European region as the refineries run rate slumped by 28% within Q1. Soaring crude maintained upwards pressure over the price curve. The slump in refinery operating rates subsequently surged the prices of Heavy Aromatic Naphtha and other downstream products in the North American region.
The supplies of Heavy Aromatic Naphtha remained tight during Q1 due to multiple throughput cuts impended by OPEC+ nations in crude oil processing. Asian refiners proportionally surged the prices of Heavy Aromatic Naphtha in the Asian Markets. The demand outlook remained uncertain due to some planned and unplanned plant turnarounds including the shutdown of ENEOS olefins plant in Japan due to earthquake in February. Towards the end of the quarter, the market outlook showed improvement due to the addition of new crackers in China and sturdy offtakes for aromatics production. Due to the high transportation freights and supply chain uncertainties, the prices of Heavy Aromatic Naphtha in India witnessed slightly uptrend with the quarterly average standing around USD 3729/ton.
Demand for Heavy Aromatic Naphtha solvent was sluggish during the first quarter of 2021, as the refineries in the Northwest European region were operating at the reduced operating capacities due to severe cold weather, followed by reduced imports from the USA. Some relief was observed as a major supplier to the region reduced the offered prices to the downstream converters. Demand was ample in the European region as the consumption from the downstream sector improved, however supplies seemed balanced with limited commercial and industrial activities.
For the Quarter Ending December 2020
Demand for Heavy Aromatic Naphtha solvent was weak in the Asian region during Q4 2020. This led to oversupply of heavy naphtha and the prices faced downward trend. Due to lower than anticipated prices and weak margins, the production units lowered their production levels and started running around only 70% of their original capacities. Although export supply was kept short due to container shortages between Asia and Europe, the demand saw a staggering rise. Despite of healthy COVID-19 recovery in several Asian countries like China and India, the demand was low but improved compared to the prior quarter. Prices for heavy naphtha prices also improved from the record lows observed in Q2 to touch normalcy in Q4.
Amid the second wave of COVID 19 in the European region, the demand of heavy naphtha kept on bottom line. Re-imposition of COVID-19 restrictions reduced the domestic oil consumption in the European countries like Russia, Germany, Italy etc. New coronavirus strain and full lockdown in UK pushed the prices and consumption to the surface. Even in December 2020, due to low demand, the prices of crude oil were seen going down every week e.g., brent crude prices in late December reduced by around 1.7% and settled at USD 50/bbl. The crude rates significantly drove the rates of Heavy Aromatic Naphtha. Meanwhile rolling out of vaccines enhanced the market sentiments, and manufacturers anticipated healthy recovery in industrial and domestic activities in the upcoming quarter.
The crude oil industry remained highly affected by low consumption of heavy naphtha solvent amid moderate recovery from the pandemic related uncertainities. Many refineries in the US were kept shut and many of them were running on lower capacities due to weather related challenges. Storms across the gulf region also affected the running status of major production units. Later during December, when demand from the Asian countries and from domestic market started rising, the prices started reporting healthy figure. Manufacturers started cutting production to increase the prices and improve margins. In addition, Shell announced in November the closure of its refinery located in Baton Rouge and New Orleans. This shut will reduce the supply of crude derivatives in upcoming years across the region.