Mitsubishi Chem in deal to buy three 25,000 mt naphtha cargoes for January-June 2017 at sharp discount

30-Aug-16

In a rare move, Japan's Mitsubishi Chemical has concluded a contract with trading firms to buy three 25,000-mt naphtha cargoes for delivery over January-June 2017, amid a weak market, as per traders in Platts. The contract was sealed at a discount of around US$5.50/mt to the Mean of Platts Japan naphtha assessments, CFR Kashima, for open specification naphtha with a minimum paraffin content of 65%. One of the sellers was French major Total SA, sources said. Some trade sources said Mitsubishi Chemical could have bought up to four parcels, but this could not be confirmed.
Platts assessed CFR Japan naphtha at a discount of US$11/mt to MOPJ naphtha assessments and CFR South Korea naphtha at a discount of US$13/mt on Friday. The CFR Japan naphtha discount was assessed at US$12/mt over August 17-18, the steepest since July 4, 2011, when it hit US$13.50/mt, S&P Global Platts data showed. Mitsubishi Chemical does not have a term contract for 2016, trade sources said. Last year the company bought via occasional spot tenders but has not been seen buying many spot cargoes to date this year, traders said.
It last sought via a spot tender 50,000 mt of similar grade naphtha for first-half November delivery, though award details were not known.

Two other North Asian petrochemical makers -- Taiwan's Formosa Petrochemical Corp. and South Korea's Lotte Chemical Corp. -- have also recently sealed term contracts at steep discounts.
Formosa's contract for more than 1 million mt of open-spec naphtha with minimum 70% paraffin content for January-December 2017 was concluded at minus US$8/mt to MOPJ naphtha assessments, Mailiao. The discount was double that concluded for its January-December 2016 deal for around the same volume, trade sources said.
Lotte Chemical finalized its purchase contract for 300,000 mt of open spec naphtha with a minimum 70% paraffin content for December 2016-November 2017 at a discount of US$7/mt to MOPJ naphtha assessments, CFR Yeosu and Daesan.

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