Taiwan’s Formosa gets higher discount for Q3-Q4 term naphtha

28 April 2009 05:24  [Source: ICIS news]

SINGAPORE (ICIS news)--Taiwan’s Formosa Petrochemical Corp (FPCC) secured higher discounts to get term naphtha for delivery over the third and fourth quarter of this year, trading sources said on Tuesday.

FPCC got discounts of $5/tonne (€3.85/tonne) to Japan quotes CFR (cost-and-freight) Taiwan for a larger-than-expected delivery of around 500,000 tonnes of open-spec naphtha supply from July to December, the sources said.

Last week tender had originally requested 25,000-225,000 tonnes to be delivered either July-September or July-December.

The Asian naphtha market is under pressure from a glut in supplies from northwest Europe, Middle East and India.

The freight costs between Taiwan and South Korea/Japan narrowed to about $1/tonne from original estimates of $2-3/tonne. The CFR Taiwan discount equates to a discount of $4/tonne on a CFR South Korea/Japan basis.

A total of 15 companies had submitted offers - ranging from discounts of $1.50/tonne to $5/tonne - for the tender and five were selected offering discounts of $5/tonne.

Neteast was one of the winners of the tender, sources said. The company was a small entity backed by a major Middle Eastern producer, traders said.

FPCC had last week purchased a 75,000 tonne cargo at a discount of $1.50/tonne to Japan quotes CFR Taiwan to be delivered over the first half of June. Sources said that it was the first discount naphtha trade of the year.

($1 = €0.77)

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By: Desmond Chia
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