Naphtha Price Per Ton Rebounds Above $900 as Supply Tightens

Particularly to South Korea, there are forecasts that the petrochemical, aviation, and shipping industries, which had recently caught their breath amid price stabilization, could suffer another shock as the burden of a high exchange rate overlaps.

According to Trading Economics, which provides real-time global raw material price information on might 20, the price of naphtha recorded $907 the previous day. This means that the price of naphtha, which had plummeted to $815.78 on might 8, has increased by as much as $100 per ton in just 20 days.

Naphtha prices have fluctuated in an N-shaped pattern, largely jumping nearly twofold immediately after the war, then falling, and then surging again. Prices remained below $500 per ton at the beginning of the year, then skyrocketed to $779.24 on March 9, and soared to $1010.5 on April 7. Since then, the prices have been whipsawing, repeating sharp declines and rapid increases.

This situation is because the volume released into the market continues to decrease as the supply shortage of crude oil, the raw material to naphtha, has accumulated over a long period. According to Kpler, a raw material information analysis site, the cumulative supply loss of crude oil and condensate in the Middle East reached 870 million barrels as of might 15, and it predicted that it will surpass 1 billion barrels at the end of might.

It added that the United States’ maritime blockade of Iranian crude oil transport has taken effect, resulting in zero crude oil shipments since might 6, and no oil tanker berthing activities have been observed at Kharg Island.

It is known that the strategic petroleum reserve of the United States recently decreased by about 9.9 million barrels. Releasing the reserve oil did not bring prices under manage, and since crude oil must be obtained to maintain inventory again, the pressure to additional increases in naphtha prices has also mounted.

As the price of naphtha, a raw material to plastics, rose, the material supply chains of major countries went on emergency alert. In Japan, there is a phenomenon of using paper cups instead of plastic cups. According to NHK and others, the Japanese convenience store Lawson decided to replace some of the plastic lids on takeout coffee cups provided at its stores with paper materials.

In the case of South Korea, the cost burden on major industries such as petrochemicals, aviation, and shipping is aggravating as the burden of the soaring won-dollar exchange rate also overlaps. The exchange rate on this day recorded 1,510.49 won per dollar at one point, continuing to rise to the past 1 month.

Furthermore, the fading expectations to an early lifting of the Strait of Hormuz blockade are also darkening the future outlook. In the early stages of the war, oil prices showed a decline as expectations grew that the Hormuz blockade could be lifted if US President Donald Trump issued conciliatory messages such as a suspension of attacks on Iran, a ceasefire, and a peace agreement.

In the case of West Texas Intermediate (WTI) crude oil, it largely fell to the $80 range however is now seen exceeding the $100 mark. On this day, WTI crude futures to July delivery traded in the $103 range, and Brent crude traded in the $110 range, respectively.