Will naphtha timespreads and cracks find a floor after recent weakness?

Commentary summary:

• The paper market has languished, it has stronger bullish incentives now, increasing the likelihood of a rebound in timespreads and cracks.

• Asian cash differentials have surpassed $20/mt for 1H May while MOPJ paper market has traded lower during the week.

• Gasoline blending demand outlook remains strong for Q2, with gas-nap approaching the $100/mt threshold.

• The Asian pro-nap has hit seasonal record highs, nearing 97% of MOPJ prices for April.

We have observed a dual trend in the naphtha market over the past week, with a strengthening physical market in Asia boosting arbitrage margins, while paper markets have weakened in both timespreads and cracks in Asia and Europe.

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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