Qatar is to start producing 200,000 tons of naphtha from October. Additional exports from Qatar next month has compelled China’s export-oriented refiner West Pacific Petrochemical Corp (WEPEC) to re evaluate its Q4 naphtha prices with buyers like Marubeni and SK Energy. Buyers are demanding large discounts on Q4 naphtha in anticipation of a supply glut next quarter.
July-September term deals were concluded at undisclosed discount levels on a free-on-board (FOB) basis, and the expected discount amount has increased to about US$8-9/ton. WEPEC may not settle for such a steep discount- As domestic naphtha demand rises in China due to start up of new petrochem plants, the quantum of material WEPEC may have for exports could shrink. China is forecast to consume 863,000 bpd of naphtha, an almost 30% spike from this years level of 665,000 bpd.