FocusAsia naphtha premiums find support at $10-11/tonne

25 September 2012 05:57  [Source: ICIS news]

By Felicia Loo

SINGAPORE (ICIS)--Premiums on spot naphtha trades in Asia appeared to be supported at $10.00-11.00/tonne (€7.70-8.47/tonne)following recent falls, as South Korean cracker operators have remained as active buyers in the market, traders said on Tuesday.

“The spread values will be maintained,” said a trader, referring to the premiums.

South Korea’s Yeochun NCC (YNCC) has bought 75,000 tonnes of naphtha for first-half November delivery to Yeosu at a premium of $10.50/tonne to Japan quotes CFR (cost & freight).

Another South Korean producer, Honam Petrochemical, had paid the same premium last week for a 50,000-tonne naphtha cargo for delivery in the first half of November to Daesan.

A further squeeze in premiums is unlikely, although the overall premiums had shrunk from previous spot naphtha purchases made by South Korean cracker operators during the first half of September, traders said.

On three cargoes totalling 75,000 tonnes for second-half October delivery, Honam Petrochemical paid a premium of $18.00-18.50/tonne to Japan quotes CFR. Two of the cargoes bound for Daesan fetched a premium of $18.50/tonne, while one cargo to Yeosu was done at a premium of $18.00/tonne.

In early September, South Korea’s LG Chem bought 50,000 tonnes of spot naphtha for delivery in the second half of October at premiums of $18.50/tonne and $19.25/tonne to Japan quotes CFR.

The premiums on naphtha purchases had fallen last week because of a knee-jerk reaction to an expected surge in supply, traders said.

Europe, which has excess supply, is estimated to ship to Asia 250,000-300,000 tonnes of naphtha, which will arrive between the end- October and the first half of November, traders said.

India, on the other hand, is exporting around 720,000 tonnes of naphtha in October, up from their September exports of 500,000-600,000 tonnes, following the end of maintenance at its refineries, traders said.

The premiums on spot naphtha purchases are likely to be stable going forward as firm demand from South Korean crackers helps soak up rising supplies from Europe and India, they said.

Structurally, Asia is short of naphtha supply and needs to import deep-sea volumes from northwest Europe, the Mediterranean and Russia, traders said.

The naphtha crack spread closed at $120.28/tonne against November Brent crude futures on Monday, up by 4.8% from 21 September and reaching the highest levels in the sixth successive trading session, according to ICIS data.

Asia open-spec naphtha prices closed at $947.50-949.50/tonne CFR Japan on Monday, up by $5/tonne from 21 September, ICIS data showed.

($1 = €0.77)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Felicia Loo

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