Europe, the Mediterranean and the United States will ship about 1 million tons of naphtha to Asia next month, similar to volumes that have been running more than 60% higher than 2012's monthly average since January, Reuters data showed.

That volume is about double Asia's structural shortage of the 500,000 tons of paraffinic naphtha it needs every month if crackers are running at full-tilt and other feedstocks such as liquefied petroleum gas (LPG) are not available.

Unlike in the previous four months, sellers are beginning to feel the pressure as May inbound cargoes would be arriving amid plentiful supplies of the cheaper alternative LPG, which can replace 5 to 15% of naphtha in some Asian crackers, and when cracker runs have been reduced in Taiwan and South Korea.

The average premium for cargoes lifting in May from India, the top spot naphtha supplier to Asia, have fallen to $42 a ton, down nearly 25% compared to March cargoes, which sold at premiums mostly at record highs due to a shortfall in supplies caused by refinery maintenance.

"I think the market will go down further as not all traders managed to find buyers for their cargoes," said a Singapore-based trader.

A naphtha surplus in the United States has made the situation for May cargoes worse, because it is betting on Asia to absorb its excess. It is not a regular exporter to Asia and sometimes takes naphtha from Europe.

However, some of the 200,000 tons of U.S. naphtha, mainly of heavy grade, initially expected to arrive in Asia next month may be sent to other final destinations.

"There is too much heavy naphtha, but there are limited buyers here. There's no point for them to come here," said a second Singapore-based trader.

He said that Mexico could be a better destination as it needs heavy naphtha to be reformed into gasoline.

Heavy naphtha can also be used in the production of paraxylene, a raw material used in the textile sector and other industries.

Any cancellation of the U.S. cargoes is not likely to turn the weak market around as Europe will jump on the chance to replace any lost shipments to Asia.

"I expect Europe to ship out more paraffinic naphtha to Asia due to weak demand in the west caused by naphtha cracker maintenance and cheaper alternative feedstock being made available," said the second trader in Singapore.

Paraffinic/open-spec naphtha is cracked into petrochemical products such as ethylene and propylene used in the plastics industry.