Support returns to European naphtha market – but is it sustainable?

Commentary summary:

• The Aug/Sept NWE timespread has rebounded by over $2.5/mt since late June lows and the back of the curve has also strengthened.

• E/W remains at seasonally high levels; arbitrage margin is lower but not fully shut.

• Flat prices remain well below June peaks, improving petchem margins outlook for summer season.

• The Priolo cracker shutdown removes a key demand center in the MED.

The naphtha market has finally found support at the start of July, particularly in Europe, where the Aug/Sept timespread has rebounded by more than $2/mt from the low reached at the end of June, strengthening across the entire forward curve over recent sessions.

Jorge Molinero is a Commodity Owner at Sparta. Starting his career as a financial analyst with BBVA, Jorge quickly transitioned to market intelligence within the energy sector, spending 4 years as a naphtha analyst with Repsol before joining Sparta in early 2023.

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