August 21, 2012 / 11:43 AM / 5 years ago

UPDATE 1-Asia naphtha East-West spread at lowest since April

(Adds details, comments)

SINGAPORE, Aug 21 (Reuters) - Asia's naphtha prompt East-West (EW) spread plunged to its lowest since April 26 on Tuesday due to weaker buying appetite among petrochemical makers and a high inflow of Western arbitrage volumes in September that have yet to find buyers, traders said.

The September EW spread fell $2.37 to $5.13 per tonne while the October EW spread dropped $1.50 per tonne to $8.50. The naphtha EW spread is the differential between Asia and European naphtha prices.

Asia is expecting to receive around 800,000 tonnes of Western naphtha in September, the highest volume in five months.

"I think traders are trying to shut the arbitrage to stop more volumes coming over to weaken the east market," said a Singapore-based naphtha trader.

"Traders have quite a bit of length to get rid of as it is, and I'm hearing some cargoes are already being rolled over into October," the trader said.

There were no immediate estimates of how much of the September volumes, out of the anticipated 800,000 tonne expected to reach Asian ports in September, remains unsold.

"Arbitrage volumes for September are heavy and everyone has known it for a while. It is just that no one knew whether those arbitrage volumes have found homes yet but it looks like some have not," said a Singapore-based naphtha swaps trader.

Reflecting the bearish sentiment and weaker demand for prompt physical cargoes, the September/October timespread fell to its lowest since end-July at a $2.75 per tonne backwardation.

The October/November timespread was also $1.50 lower at a $3.00 per tonne backwardation.

The September and October fixed-priced swap contracts were also $1.50 and 50 cents weaker at $951.00 and $948.25 per tonne respectively despite Brent crude rising 45 cents to $114.53 per barrel by 0830 GMT. (Reporting by Bohan Loh)

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