21 April 2008 08:25 [Source: ICIS news]
SINGAPORE (ICIS news)--Northeast (NE) Asian end-users are snapping up naphtha cargoes for May delivery at discounted levels with the latest deal being done at a $1.75/tonne discount to Japan quotes, industry sources said on Monday.
The deal was done on a CFR (cost and freight) Korea basis for delivery in the second half of May for a full-range naphtha cargo. This equates to roughly a discount of $2.75-3.25/tonne for an open spec cargo.
The last deal for an open spec naphtha cargo for May delivery was done at flat to Japan quotes CFR Korea around mid-April and at premiums of $1.50-1.75/tonne to Japan quotes CFR Korea for May delivery in early April.
A Japanese end-user also bought an open spec cargo at a discount of around $1/tonne to Japan quotes CFR Japan for delivery in the first half of June early this week.
Earlier on, demand for naphtha as a feedstock was weak as relatively high costs and poor margins from downstream derivatives kept South Korean cracker operators at the sidelines.
Some NE Asian end-users were also trying to increase their use of liquefied petroleum gas (LPG) as feedstock, but still had to contend with the highly priced naphtha as they had been able to replace only 20% of their feedstock requirements with LPG.
Demand for naphtha from European end-users was also weak and the situation was further exacerbated by lacklustre demand for mogas in Europe and USA, sources added.
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