Abu Dhabi National Oil Co (ADNOC) plans to shorten its term naphtha delivery period to three from 12 months starting October. It has pegged its splitter naphtha premium at US$11.50/ton to its own formula on a free-on-board (FOB) basis, and the paraffinic grade at US$12.50/ton FOB for the new October term supplies. Buyers considered these offers too high in an oversupplied market, as per Reuters, at a time when demand is weak in South Korea and Japan. Reducing the period to three months without reducing the premiums does not seem to be working, as traders do not expect the market to improve for the rest of the year.
ADNOC is looking to sell around 1 mln tons of naphtha for October 2010-September 2011 delivery. ADNOC aims to dispose off the huge backlog of supplies within the shortest period as most of their Asian term customers had either reduced, or scrapped, their term contracts in recent months due to high premiums offered.