15 June 2012 11:49 [Source: ICIS news]
By Ong Sheau Ling
At the close of trade, open-spec naphtha prices were assessed at $756.00-758.00/tonne (€597.24-599.82/tonne) CFR (cost and freight)
Naphtha crack spread versus August Brent crude futures has also recovered to $23.57/tonne on 15 June, after landing on a three-and-a-half year low of $3.27/tonne on 13 June, when naphtha prices for second-half July loading also hit a 20-month low at below $740/tonne CFR Japan.
“The industry still looks grim,” a South Korean trader said.
The market has remained in a contango for the sixth trading session, indicating a bearish market because prompt prices are weaker than forward prices.
“The news of the restart of FPCC’s [Formosa Petrochemical Corp] No 3 cracker did lift sentiment, but in fact, FPCC is still not buying spot. It is just going to use its inventories in the tanks for the moment,” a Singapore-based trader said.
Meanwhile, availability of naphtha has increased with Abu Dhabi National Oil Co's (Adnoc) recent sales tender of 75,000 tonnes of splitter naphtha for loading on 7-9 July – a left-over from its term supplies.
“Those unsold term supplies from the
“With the premium fetched by the spot purchases being half of the [one-year] term [contract for July 2012 to June 2012], this shows how bad is the spot market now,” another Singapore-based trader said, referring to the results of ADNOC’s tender.
A bearish market is also evident based on a late-week tender for a second-half July arrival cargo by South Korea’s Honam Petrochemical that was settled at a discount of $4-5/tonne to Japan quotes CFR (cost and freight). It was the first discount on a tendered naphtha cargo in seven months.
In other deals, premiums paid on naphtha cargoes are getting thinner.
India-based Mangalore Refinery and Petrochemicals Ltd (MRPL) sold by tender a 35,000-tonne naphtha parcel for loading on 11-13 July at a premium of $14/tonne to
“Every next tender closed, the premium becomes smaller. There is no sign of recovery,” a third Singapore-based trader said.
With product margins still squeezed, most cracker operators said they are keeping spot purchases at a bare minimum.
Ethylene prices were softer week on week at $880-930/tonne
“Now, [the] situation is worse. Naphtha goes up but downstream prices go down, the product margins will be further squeezed,” a cracker operator said.
($1 = €0.79)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
Asian Chemical Connections