21 August 2013 03:57 [Source: ICIS news]
By Felicia Loo
SINGAPORE (ICIS)--Naphtha’s price spreads and crack values in Asia are set to weaken as the regional market is awash with supply amid outages and impending turnaround at regional crackers, traders said on Wednesday.
Open-spec first-half October prices rose to $923-926/tonne (€692-695/tonne) CFR (cost & freight) Japan on Wednesday morning, up by $8-9/tonne from the previous session as Brent crude futures closed at above $110/bbl overnight, according to ICIS.
The spread between the first half of October and the first half of November contracts narrowed to $3.50/tonne in backwardation at the close of trade on Tuesday from $5.00/tonne on Monday, the data showed.
Meanwhile, the naphtha crack spread versus October Brent crude futures tumbled to $98.43/tonne from $105.65/tonne, also in response to lower European naphtha prices that dwindled from strong levels last week, it indicated.
“There are so many [naphtha] cargoes in the prompt market [in Asia] and there are not so many uncovered requirements,” said a trader.
The premiums weakened consequently given a market facing ample cargo availability.
South Korea’s Lotte Chemical has bought two 25,000-tonne naphtha cargoes for delivery at lower premiums.
The deal for the second-half September cargo was done at a premium of $2.00/tonne to Japan quotes CFR pricing, while the deal for the first-half October cargo was done at a premium of $3.00/tonne to Japan quotes CFR.
Lotte previously bought a 25,000-tonne naphtha cargo for delivery in the first half of September, at Japan quotes CFR pricing plus $7.00/tonne.
Another South Korean buyer, LG Chem, has purchased 25,000 tonnes of naphtha for delivery in the second half of September, at a premium of $3.75/tonne to Japan quotes CFR pricing. This compared with its previous purchase of 50,000 tonnes of naphtha, for delivery to Daesan in the first half of September, at Japan quotes CFR pricing plus $4.00/tonne.
A huge influx of western deep-sea naphtha inflows is weighing on the Asian market, traders said.
Deep-sea cargo arrivals in September were estimated to be around 1.4m tonnes, with some of the volumes being spilled over from August deliveries, they said.
Meanwhile, plant maintenance issues will chip away demand in Asia at a time of high imports flows from the western markets, traders said.
South Korea’s second-largest refiner GS Caltex plans to shut its 90,000 bbl/day naphtha splitter in Yeosu during 1-25 October for regular maintenance.
In Japan, JX Nippon Oil and Energy’s 460,000 tonne/year naphtha cracker at Kawasaki, is likely to be shut for at least 10 days, and the earliest restart timing is likely to be at the end of August. The facility was shut early on 19 August because of a technical problem.
Mitsubishi Chemical, on the other hand, will conduct a 50-day turnaround at its 489,000 tonne/year naphtha cracker in Kashima from end-August.
In Taiwan, Formosa Petrochemical Corp will shut its 1.03m tonne/year naphtha cracker in Mailiao from mid-September to end-October.
($1 = €0.75)
Additional reporting by Helen LeeRead 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