Strong gasoline demand, refinery maintenance and higher domestic need for naphtha are driving India's September exports down. September naphtha exports will be restricted to 550,000 tons, the lowest in four months, as per Reuters. Few traders were even more pessimistic, pegging India's export volumes next month at no more than 500,000 tons, or lowest in at least two years. The low Indian exports coupled with limited European exports arriving in October will support naphtha prices in the short-haul. This was already evident in the prices South Korea's LG Chem had to pay on Monday for 50,000 tons of naphtha for H1-October arrival at premiums of US$8/ton to Japan spot quotes on a cost-and-freight (C&F) basis. This sharply contrasted the discount of US$1.50-2/ton LG Chem had paid on Aug. 21.
This will be the second time in 2012 that Reliance will skip spot sales. RIL skipped July spot sales due to better gasoline margins over naphtha but managed to resume August exports. ONGC, which exported 105,000 tons of naphtha out of Hazira for August shipment, is expected to reduce its September exports to 70,000 tons. Indian Oil Corp (IOC) may also limit exports due to high operating rates at its Panipat steam cracker. Hindustan Petroleum Corp Ltd (HPCL) is conducting a partial maintenance at its 166,000 bpd Vizag refinery likely until September.