Asia naphtha draws support from H2 Jan demand; premiums up

SINGAPORE (ICIS)–Asia’s naphtha prices are buoyant on the back of end-user buying H2 January-delivery cargoes, driving up premiums on spot deals.

On Friday morning, open-specification naphtha prices averaged at around $604/tonne CFR (cost and freight) Japan for H2 January, steady from the previous day’s close. Prices are up $15.50/tonne from a week earlier, ICIS data showed.

End-users in northeast Asia emerged to pick up H2 January naphtha cargoes.

Taiwan’s Formosa Petrochemical (FPCC) bought open-specification naphtha for delivery on 20-30 January to Mailiao, at a premium in the high-$30/tonne levels to its own pricing formula.

South Korea’s Hanwha Total also secured H2 January heavy-full range naphtha supplies at a firmer premium level.

Elsewhere, India’s naphtha export cargoes also commanded strong premiums.

BPCL sold cargoes for December loading from Kochi at premiums near $51/tonne and $61/tonne to its own pricing formula on a free-on-board (FOB) basis.

Premiums were significantly higher than the $26/tonne premium to its pricing formula BPCL attained for its sale of a 16-17 October loading naphtha from the same port.

Lesser arbitrage flows from the Middle East in part lifted sentiment. November cargo flows to Asia are estimated at around 2.1m tonnes, down from October volumes of around 2.6m tonnes.

On a free-on-board (FOB) Middle East basis, naphtha prices on 12 December were at $538.99/tonne, climbing 2% from the previous week, according to ICIS data.

Naphtha’s forward market structure remained in backwardation, with H2 January prices $36/tonne higher than H2 February. Reinforcing the firm market, the backwardated spread was just around $18/tonne a month ago.

Focus article by Melanie Wee

Additional reporting by Li Li Chng

Photo: A port in Tokyo, Japan. (By Franck Robichon/EPA-EFE/Shutterstock)