FocusAsia’s spot naphtha premiums find support from tight supply

01 February 2013 02:27  [Source: ICIS news]

By Felicia Loo

Naphtha cracker in AsiaSINGAPORE (ICIS)--Asia’s spot naphtha premiums are expected to be shored up by tightening supply of the petrochemical feedstock and strong demand from the end-users amid high cracker run rates, traders said on Friday.

Both South Korean Yeochun NCC (YNCC) and Samsung Total bought a total of 75,000 tonnes of spot naphtha supply in the week at premiums of $22/tonne (€16/tonne) and at premiums of $23-24/tonne, respectively, against Japan quotes CFR (cost & freight).

The cargoes are scheduled for delivery in the first half of March.

“The end-user demand from South Korea is strong. Supply is tight from India,” said a trader.

Having raised the operating rates at its three Yeosu-based crackers to 100% in January from 90% in December, YNCC will continue to run the crackers at full tilt in February.

YNCC’s three crackers at the site have a combined nameplate ethylene capacity of 1.9m tonnes/year.

Meanwhile, Samsung Total will continue to operate its 1m tonne/year cracker in Daesan at 100% of capacity in February, unchanged from January.

Earlier in the week, Taiwan’s Formosa Petrochemical Corp (FPCC) bought around 150,000 tonnes of spot naphtha for delivery to Mailiao in the first half of March, at a premium of $15.00-16.00/tonne (€11.10-11.84/tonne) to Japan quotes CFR. 

FPCC previously bought by tender 100,000 tonnes of spot naphtha for delivery to Mailiao in the second half of February, at a premium of $9.50/tonne to Japan quotes CFR.

The premiums surged in response to a reduction in Indian naphtha exports.

Indian refiners will export an estimated 500,000 tonnes of naphtha in February, down from January exports of 600,000 tonnes. 

Compounding the supply situation, Asia may face lower deep-sea naphtha inflows from Europe where a gasoline arbitrage opening to the US is bolstering the purchase of naphtha for gasoline blending. 

Already some of the deep-sea naphtha from Europe was being rolled over to delivery in the first half of March from the second half of February because of poor weather conditions previously, traders said.

Asia’s open-spec naphtha prices closed at $999.00-1,001.00/tonne CFR Japan on Thursday – the highest since 14 September last year, according to ICIS data.

The backwardation widened to $23.50/tonne on Thursday from $22.00/tonne on Wednesday, while the crack spread against Brent crude futures closed at $139.23/tonne, the data indicated.

Meanwhile, Asia’s ethylene prices rose by $10/tonne at the lower end of the range to  $1,360-1,400/tonne CFR NE (northeast) Asia on Thursday.

($1 = €0.74)

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

By: Felicia Loo

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