Taiwan’s Formosa pays first naphtha discount of the year

23 April 2009 12:23  [Source: ICIS news]

SINGAPORE (ICIS news)--Taiwan’s Formosa Petrochemical Corp (FPCC) has paid the first discount of the year for a large parcel of naphtha, according to trading sources on Thursday.

FPCC paid a discount of $1.50/tonne to Japan quotes CFR (cost and freight) Taiwan for a 75,000-tonne cargo of open-spec naphtha to be delivered over the first half of June.

Sources said this was the first discount naphtha trade of the year. The freight costs between Korea/Japan narrowed to about $1/tonne from original estimates of $2-3/tonne.

The CFR Taiwan premium equates to a slight discount on a CFR Korea/Japan basis.

A glut in supplies from northwest Europe, Kuwait and India has put pressure on the Asian naphtha market.

Furthermore, some Asian cracker operators have begun using liquefied petroleum gas (LPG) in place of naphtha, replacing up to 15% of the latter and reducing its demand.

Sources said the cargo bought by FPCC was sold by a single seller and that it was to fulfil a spot requirement by the cracker operator.

FPCC had recently been purchasing a couple of smaller lot sizes of 25,000 tonnes from a few sellers to make up one big lot of 75,000 tonnes.

This purchase comes on top of another term tender, which sought up to 225,000 tonnes of naphtha to be delivered over 1 July-30 September or 1 July-31 December.

FPCC last paid for 150,000 tonnes of open spec naphtha for second half May delivery at premium of as low as $1.50/tonne to Japan quotes CFR Taiwan.

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By: Desmond Chia
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