Naphtha has lost 7% in price from a year earlier, impacted by the ongoing malaise in the petrochemicals sector. As was earlier reported by the IEA, between January and May 2022 demand for naphtha plummeted by 1.1 million barrels per day (14.2% of total demand and more than double the typical seasonal fall).
After peaking in June, spreads for gasoline and middle distillates are now contracting. So is the naphtha crack, which reached its widest point in April. For most other products, however, spreads remain wider than seasonally adjusted normal levels. Those refiners who continue to buy cheap Russian crude, which has traded at a 20% discount this month, are now sitting pretty as they enjoy a clear advantage over peers. Indeed, the diesel crack spread to Urals has been around $525 per tonne in September, compared with only $380 to Brent. When it comes to naphtha produced from Brent crude, things look even worse, with the gross margin remaining in negative territory for the fourth straight month at an average of minus $35 per tonne (see Fig. 2).