South Korea’s Honam buys 75,000 tonnes naphtha at +$3-4/tonne

05 June 2012 03:56  [Source: ICIS news]

SINGAPORE (ICIS)--South Korea’s Honam Petrochemical has bought three cargoes of 25,000 tonnes each of naphtha for loading in the first half of July, a source close to the company said on Tuesday.

The three 25,000-tonne cargoes were settled at a premium of $3.00-4.00/tonne (€2.40-3.20/tonne) to Japan quotes CFR (cost and freight) for open-spec naphtha, the source added.

The low premium was a result of weak energy values and an overall softness in downstream petrochemical sector, sources said.

The origins of the cargoes were not immediately known because the cracker operator bought them from traders.

“Depending on the market conditions, we may need to buy additional first half of July loading since the cracker is still running at 95-100%,” he said.

Honam operates a 1.07m tonne/year Daesan-based cracker and a 1m tonne/year Yeosu-based cracker.

Honam bought two 25,000-tonne parcels for first half of July loading at a premium of close to $6.50/tonne to Japan quotes CFR Japan in the past.

The cracker operator may not renew its contract with Abu Dhabi National Oil Company (Adnoc) if the premium is not revised lower, sources said.

Adnoc offers a one-year contract for term naphtha supplies for July 2012 to June 2013 at a $26.00-27.50/tonne premium.

“Some buyers have already accepted [the term contract], with conditions such as a reduction of volume and adjustment of delivery months to later dates such as December or next year,” he said.

($1 = €0.80)

By: Ong Sheau Ling
+65 6780 4359

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