The naphtha market rebounds from recent lows – will it return to the uptrend or fundamentals have changed?

Commentary summary:

• Naphtha market saw a sharp correction last week, with prompt timespreads in Europe and Asia falling by $3/mt, while MB C5 has lost 12 cpg since February 20th.

• Gasoline market weakness has dragged down naphtha valuations, but Western gasoline outlook has improved slightly due to new potential arbitrage opportunities.

• The stagnation of petrochemical demand in Europe has further contributed to the decline in naphtha pricing.

• Asian physical market trades higher, improving the arb opportunities for Q2.

Last week, we saw a sharp correction in the naphtha market, particularly evident in prompt timespreads in Europe and Asia.

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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