Naphtha price in Asia was at a two-week low of US$937/ton on Thursday while margins fell by 11.28% to a three-month low of US$106.45/ton on concerns over possible demand lost due to the gloomy global economic outlook that weighed on values, as per Reuters. The turn of events led to lower premiums for privately-run Reliance Industries which sold 55,000 tons of naphtha for December loading to two buyers. But some traders were optimistic the market will recover within a short time.
Players opine that these sentiments will be temporary. The market ahead should not be any worse off than what it is now. Data from China, Asia's top petrochemical importer, was more positive with Chinese manufacturing activity reaching a 13-month high in November. This should help reassure markets about the state of the world's No. 2 economy. Traders were also convinced supplies would stay tight due to heavy refinery maintenance in Taiwan and South Korea next March.
"There will be heavy refinery maintenance next year, but hardly any cracker maintenance in South Korea. I expect supplies to be squeezed," said a North Asian trader. South Korean naphtha crackers will mostly skip maintenance that requires them to go offline in 2013, although SK Energy will shut the smaller of two units in October 2013.