Naphtha flips into discount in Asia on weak C2

12 March 2008 06:54  [Source: ICIS news]

SINGAPORE (ICIS news)--Asian naphtha premiums flipped into discount for the first time this year due to weak margins from downstream ethylene, market sources said on Wednesday.

Taiwan's Formosa Petrochemical Corp (FPCC) awarded its tender to buy naphtha for delivery in the second half of April at flat-to-$1.00/tonne (€0.65/tonne) discount to published quotes on a (cost-and-freight) CFR (cost and freight) Taiwan basis.

The tender sought 75,000 tonnes of open spec naphtha for April 16-May 10 delivery into Mailiao, but details of the seller were not forthcoming.. The tender had closed on March 10 with validity till March 11.

The price fall surprised the market as demand from FPCC was expected to remain firm even after it had purchased a larger-than-expected 525,000 tonnes of naphtha for second half of March till first half of April delivery, at a premium of $1.50-2.00/tonne to Japan quotes CFR Mailiao.

FPCC had shut down its No.2 900,000-tonne/year naphtha cracker on Monday for seven to ten days minor repair work.

Formosa Petrochemical decided to shut down the naphtha cracker in mid-March instead of April in order to cope with mounting ethylene stocks, weak margins and soaring feedstock prices.

($1 = €0.65)

By: Desmond Chia
+65 6780 4359

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