Buying sentiments are expected to turn bearish as the market absorbs news of the pipeline fire at Formosa Petrochemical's Mailiao refinery late Tuesday, as per Platts.
Demand from Formosa, one of the biggest naphtha buyers in the region, is expected to remain capped or soften further in the wake of the fire- a further blow to an unsteady naphtha market.
Although details of volumes is unclear, Formosa is deferring [term naphtha] deliveries again.
The market is now in contango now, in a wait-and-watch mode as it awaits decision from the Taiwanese authorities.
Asian naphtha cracks fell sharply from Tuesday's two-month high, settling at a one-week low of US$113.58/mt, while naphtha outright prices eased to US$998.75/mt. The fall in the Asian naphtha market follows a short stint of bullishness which had propped up naphtha prices early this week. Reverse arbitrage movements that were sending Middle East cargoes to the West as well as market expectations of higher naphtha demand from Formosa were part of the reasons behind the firmer naphtha market seen Monday and Tuesday.