NE Asia naphtha premiums wane to single digits on slow demand

03 February 2010 10:45  [Source: ICIS news]

SINGAPORE (ICIS news)--Spot naphtha premiums in northeast Asia have toned down to single digits for March delivery and are much weaker for second-half March arrival, as demand has softened ahead of peak cracker-maintenance projects next month, traders said on Wednesday.

Open-spec naphtha cargoes for second-half March delivery were assessed at a premium of around $4/tonne (€2.90/tonne) CFR (cost and freight) South Korea, compared with premiums of $7-8/tonne for first-half March arrival, they said.

Prices have fallen from premiums of $17-18/tonne fetched for spot deals that were sealed for second-half February delivery, traders said.

A string of recent spot trades showed that open-spec cargoes for first-half March delivery were sealed at premiums of $7-8/tonne CFR, with premiums to slide further as demand softened.

South Korea’s Yeochun Naphtha Cracking Center (YNCC), which bought 25,000 tonnes of naphtha at a premium of around $7/tonne for delivery in the first half of March last week, was seeking two spot cargoes for second-half March arrival.

“Only ethylene is strong, and the margins are incredible. But requirements from petrochemical side are declining due to maintenance,” said a South Korea-based trader, adding that higher refinery runs led to rising naphtha supplies.

High ethylene prices, currently at $1,370-1,400/tonne CFR NE Asia, helped to support margins at around $680-700/tonne, which were more than enough to cover the breakeven levels of $250-300/tonne, traders said.

Ethylene prices were well supported because of tight supply in China, they added.

A large 800,000 tonne/year naphtha cracker located at Huizhou, China, which is owned by CNOOC and Shell Petrochemicals, would be shut for two months in March for maintenance and an expansion of its capacity to 1m tonnes/year.

($1 = €0.72)

Read John Richardson and Malini Hariharan’s Asian Chemical Connections blog
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By: Felicia Loo

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