S Korea’s YNCC mulls scrapping term naphtha tender

17 August 2012 05:03  [Source: ICIS news]

SINGAPORE (ICIS)--South Korean producer Yeochun NCC (YNCC) may consider scrapping a term tender to buy naphtha supplies for September 2012 to August 2013 delivery because of high offers and weakening petrochemical demand, traders said on Friday.

The YNCC tender closed on 3 August, with validity till 7 August.

YNCC sought to buy the supplies at a premium of $1.50/tonne(€1.22/tonne) to Japan quotes CFR (cost and freight),

However, the term offers stood at a premium of $5.00-6.00/tonne to Japan quotes CFR. “The outlook on the petrochemical demand is not bright and demand is diminishing,” said one trader.

However, others argued that supplies would be tight in the fourth quarter because of expectations of limited arbitrage [naphtha] material from Europe and the Mediterranean, traders said.

YNCC previously bought around 75,000 tonnes of naphtha in the spot market for delivery in the second half of September at a premium of $5.00/tonne to Japan quotes CFR.

YNCC has a one-year contract for 800,000 tonnes of naphtha supply for January-December 2012 delivery to Yeosu. Its last term purchase of the open-spec material under the existing contract was at a discount of $0.50/tonne to Japan CFR quotes.

On top of the term supply, the monthly spot intake for YNCC is typically three to four cargoes.

The South Korean producer is currently operating its 857,000 tonne/year No1, 578,000 tonne/year No 2 and 465,000 tonne/year No 3 crackers at Yeosu at 100% capacity.

($1 = €0.81)

By: Felicia Loo

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