20 September 2007 06:16 [Source: ICIS news]
SINGAPORE (ICIS news)--Saudi Arabian Oil Co's (Aramco) talks this week to export naphtha to Asia from October 2007 to March 2008 has reached an impasse, with buyers in Japan and South Korea balking at its current high premium, traders said on Thursday.
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This was lower compared with its previous term price of $25/tonne premium concluded with some Asian buyers in July.
While the offer may be lower than the previous term price, most buyers said Aramco should reduce its offer further to a single-digit premium in line with recent spot deals done at $5/tonne premium to the
“Why should we pay a $16-17 premium for (Saudi) term barrels, when it recently sold spot cargoes at only $5 premium,” said a Japanese petrochemicals producer, whose company recently trimmed its naphtha contract volume from the
Other like-minded buyers also said it would be difficult for Aramco to achieve a double-digit premium for its term naphtha supplies in view of prevailing bearish sentiment in the physical market.
“There is a lot of resistance from buyers towards Saudi’s term offer price right now. It would not be an easy negotiation,” a South Korean trader said.
Despite this week’s rally in open spec prices in response to crude’s price surge to over $82/bbl, Asia’s naphtha market continued to be weighed down by a supply overhang due to ample exports from
Weak market sentiment was also reflected in spot trades that were concluded at sharp discounts recently at $5/tonne below the Japan spot quotes, CFR (cost and freight), traders said.
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