FocusAsia's naphtha premiums likely to continue falling in April

04 April 2012 09:48  [Source: ICIS news]

By Quintella Koh

Naphtha premiums likely to continue falling in AsiaSINGAPORE (ICIS)--Spot naphtha premiums are likely to continue their decline for the rest of April because of lower cracker operating rates and delays in cracker start-ups amid a rise in prompt spot cargoes, several traders said on Wednesday.

South Korea’s Honam Petrochemical has been running its 1m tonne/year cracker in Daesan at a reduced rate of 90% capacity since late March because of mechanical problems, a company source said earlier this week. It has not been decided if the cracker will be shut for repairs and the source did not provide further details.

In Taiwan, CPC Corp has delayed the start-up of a new residual fluid catalytic cracker (RFCC) at its Dalin refinery by around one month to the second half of June because of construction delays, a source close to the company said earlier this week. The RFCC, which can produce 400,000-450,000 tonnes/year of propylene, was initially scheduled to start up in the second half of May.

Meanwhile, the bulk of around 1m tonnes of naphtha cargoes from the US and the eurozone, which were booked by trading houses in the second half of February, arrived in Asia at the end of March, the traders said. The rest of the cargoes will arrive in the first half of April, they added.

Premiums paid for naphtha tenders have fallen since the start of last week because of these events, they said.

CPC Corp has purchased 55,000 tonnes of full-range naphtha for delivery in the second half of May at a $9.00-13.00/tonne (€6.84-9.88/tonne) premium from trading house Vitol, traders said on Wednesday.

The premium is around half of the amount CPC Corp paid for its last naphtha purchase in early March on a CFR (cost & freight) Japan quotes basis.

Malaysia’s Titan Chemicals purchased last week a 30,000 tonne full-range naphtha cargo for arrival in the first half of May at plus $13.00/tonne to CFR Japan quotes.

The cargo was purchased from a Middle Eastern trader and it was scheduled to be delivered into Pasir Gudang. Titan Chemicals last bought by tender 30,000 tonnes of full-range naphtha cargo for delivery in the first half of April at plus $20.00/tonne to CFR Japan quotes.

South Korea’s LG Chem purchased by tender two cargoes, each comprising 25,000 tonnes of open-spec naphtha at plus $18.75-19.25/tonne to CFR Japan quotes.

The first cargo, priced at plus $18.75/tonne to CFR Japan quotes, is scheduled to be delivered into Yeosu in the first half of May. The second cargo, priced at plus $19.25/tonne to CFR Japan quotes, is scheduled to be delivered into Daesan during the same period.

LG Chem last bought by tender 25,000 tonnes of open-spec naphtha for delivery into Yeosu in the second half of March at plus $19.50-2.00/tonne to CFR Japan quotes.

The CFR Japan prices of naphtha were at $1,075.50-1,078.50/tonne on Wednesday morning, up by $2.00/tonne from Tuesday.

“We can expect premiums paid for spot naphtha cargoes to continue falling as cracker operators are no longer in a hurry to stock up on inventories. If the price is not right, the cracker operators will just wait,” said a trader.

($1 = €0.76)


By: Quintella Koh
+65 6780 4372



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