The naphtha Asian market is likely to remain under pressure with a supply glut that will be caused by continuance of high naphtha export volume by Indian refiners. The Indians are expected to sustain naphtha exports at 900,000 tons for October despite the end of the monsoon. Indian naphtha exports usually spike at the start of the monsoon season because less thermal power is generated in favour of hydropower. Growing consumption of natural gas as feedstock instead of naphtha by the power sector has lead to availability of surplus naphtha. The level for October exports is marginally lower than September volumes of 950,000-1.0 mln tons, and above the January-July average of 770,000 tons.
Indian refiners have already offered or sold at least 330,000 tonnes of naphtha for October loading so far. Most of the cargoes are from state-run refiners such as Indian Oil Corp. and Bharat Petroleum Corp Ltd (BPCL) through term sales. The high Indian exports and slow demand due to shutdowns at North Asian petrochemical plants are keeping naphtha differentials as low as $5.50 a ton.
Taiwan's Formosa Petrochemical Corp. has delayed the restart of its 700,000 tpa No. 1 cracker from end-August to around Sept. 20, and deferred the maintenance for its 900,000 tpa No. 2 unit from Sept. 3 until after the No. 1 cracker restart. South Korea's Honam Petrochemical Corp. is due to shut down its 720,000 tpa cracker for 30 days from September 27.