Asia naphtha still at discount despite backwardation
27 May 2008 08:43 [Source: ICIS news]
SINGAPORE (ICIS news)--Asian naphtha is still trading at discount levels despite the market being in backwardation, according to industry sources on Tuesday.
The recent purchase by Taiwan’s CPC for full range naphtha supplies at a discount of $4-5/tonne CFR (cost and freight) Taiwan equates to around discount of $5.50-6.50/tonne CFR Taiwan for open spec material.
“This is a hefty discount, considering the fact that the market is strong and backwardation is widening,” a source said. In fact, most sellers did not want to sell at such big discounts.
South Korean end-users recently concluded their term naphtha supplies for open spec material at discounts of $1.50-2.00/tonne to
On the other hand, the high naphtha prices have kept end-users at bay and they would rather cut operating rates at their naphtha crackers.
SK Energy in South Korea, Chandra Asri in Indonesia and CPC in Taiwan had all cut operating rates at their crackers recently.
“End-users are just not buying, so sellers have to sell at discount levels. Premium levels are not going to attract anyone,” another source added.
Asian naphtha broke another new historical record high late Monday after being traded at $1,125.00/ CFR Japan.
Asian naphtha prices closed higher the previous day despite softer crude values.
First-half July prices indications were pegged at $1,129-1,130/tonne CFR Japan, second half July at $1,124.50-1,125.50/tonne CFR Japan and first half August at $1,122-1,123/tonne CFR Japan.
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By: Desmond Chia
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