* Asia demand up on robust petchem margins
* S.Korea crackers restart spur demand
* High LPG prices prevent cracker operators from switching fuel
SINGAPORE, Jan 19 (Reuters) - Asia is estimated to receive about 2 million tonnes of naphtha each in January and February from Europe, the Mediterranean and the United States, according to several trade sources and Refinitiv Oil Research.
That would be an increase in the arbitrage flows to Asia
from December, which were about 1.5 million tonnes, Refinitiv
data shows, a two-month low. Strong prices in Asia are pulling
in more shipments from Russia, the Netherlands, Norway, and
Mediterranean countries such as Algeria, Egypt and Greece,
according to the data.
As of Monday, the total volume of naphtha flowing into Asia in January is estimated to rise to a five-month high of 5.8 million to 5.9 million tonnes, above 2020's average of about 5.79 million tonnes, according to Krystal Chung, a senior Refinitiv analyst.
Several naphtha crackers in South Korea are resuming operations this month as the profit margins for plastics raw materials, ethylene and propylene, have climbed, pushing up spot premiums for the petrochemical feedstock in Asia.
Asian naphtha crackers are operating at full rates to capture strong petrochemical margins but refineries in north Asia, except for China, are limiting their fuel output as overall refining margins are still much lower than before the COVID-19 pandemic, the sources said.
High prices for alternative petrochemical feedstock liquefied petroleum gas (LPG) has prevented cracker operators from switching fuel, said K.Y. Lin, spokesman at Taiwan's Formosa Petrochemical, a major naphtha buyer in Asia.
Strong margins for European petrochemical makers and firm demand for naphtha in gasoline blending in the United States are also capping exports to Asia, he said.
(Reporting by Florence Tan and Shu Zhang; Editing by Christian Schmollinger)
