A day after spiking to the weeks highest level, naphtha prices in Asia eased over the weekend and naphtha cracks saw a marginal uptrend. However, outlook is considered to be pessimistic on muted demand with the onset of the holiday week in China and South Korea. Adding to the bearish sentiments is the reduction in run rates by few Japanese petrochemical makers including Sanyo Petrochemical. Sanyo has cut run rates at its sole naphtha cracker to 85-90% this month as it readies for a turnaround at its downstream plant. Mitsui Chemicals has also reduced runs at two naphtha crackers in October preceding a maintenance turnaround at a downstream petrochemical plant. Sumitomo Chemical will keep its sole naphtha cracker run
rates at 70-80% capacity until H2-October due to an ongoing turnaround at downstream petrochemical units.
Interestingly, the reduction in run rates is expected to intensify from November due to an anticipated further dip in petrochemical prices rather than maintenance turnarounds. The slowdown in demand from China overlaps with the new capacities coming on stream in China and the Middle East.