Differentials for open-spec and full range naphtha for the Far East for delivery in June have fallen swiftly, with some traded on discounts on acute anxiety by sellers to unload their naphtha amid expectations of increased supplies from India and Europe. As per Platts, Honam Petrochemicals has bought 40,000 mt of full range naphtha in two clips for delivery in H2 May and H1 June. The full cargo of 25,000 mt for delivery into Yeosu port in H1 June was heard traded by an oil major at a discount between 50 cents/mt and US$1/mt to the Mean of Platts Japan naphtha assessment.
The partial cargo of 15,000 mt for delivery in H2 May into Daesan was heard done at a slight premium of about US$1/mt to MOPJ naphtha assessments by Korean trading house Hanwha. Last week, Taiwan's Formosa Petrochemicals bought 75,000 mt of open spec naphtha with a minimum 70% paraffin content for H1 June delivery at a discount of US$1.50/mt to MOPJ naphtha assessments, the first time this year that differentials converted into a discount.
India, with 530,000-540,000 mt of naphtha for export in May, could be increasing the figure by 60,000-70,000 tons as Reliance Industries is expected to have an additional 80,000 mt spot cargo to offer for May. India’s April exports totaled to 550,000 mt. Kuwait Petroleum, that sells naphtha sporadically, has also sold 200,000 mt of spot full range naphtha for May lifting on reduced domestic demand due to delay in start up of aromatics plant.
An all time high volume of arbitrage fixtures from Europe for May arrival, coupled with expectations of more to come in June, is also exerting downward pressure on naphtha prices in Asia.