Naphtha Holds Rebound from Q2

Futures for naphtha cargoes to be delivered in Northwest Europe were at $560 per tonne in September, holding its gradual rebound since April's plunge bottomed at $525 as markets continued to assess the outlook of petrochemical demand and the supply of their feedstock. Signs of tightness in the supply of petrochemical feedstocks from Asia persisted as Ukrainian attacks on Russian refineries limited output from the key producer to Asian manufacturing hubs, increasing buying competition for Europe. This was magnified by proposed sanctions from the EU on Russian energy, including multiple fuel tankers and measures against countries that fully engage in business with Russian energy producers. In the meantime, a series of output hikes from OPEC+ limited the magnitude of Naphtha's positive momentum since April. Also, contractionary manufacturing PMIs in Europe reflected poor demand for the broad industrial uses in fuel, and for paints and solvents commonly used in light distillates.