Is the recovery in naphtha cracks in Asia temporary?

Asia's naphtha price was at a three-session low on Thursday, while cracks were at a three-session high with physical timespreads flipping into a slight premium from parity levels as buyers emerged, as per Reuters. However, the uptrend is expected to be short-lived as most active buyers from North Asia, except those from South Korea, are mostly absent. LG Chem bought an estimated 75,000 tons of spot naphtha for H2-December arrival at a discount of US$1.50/ton to Japan spot quotes on a cost-and-freight (C&F) basis. Samsung Total is also seeking volumes for the same delivery period. Earlier, Honam Petrochemical bought around 25,000 tons for H1-December arrival at the same discount levels. The backwardated market is not expected to last as many petrochemical makers have been impacted by weak plastic margins and are struggling. South Korea seems to be the only country that is still well-buffered by the lack of plastic import demand from China due to better technology and efficiencies. Customers continue to resist ADNOC's 2012 term offers for three naphtha grades at premiums of US$17-18.50/ton to its own price formula on a free-on-board (FOB) basis, despite the offers have been reduced by up to 12.5%. Given the situation, buyers are resisting and have countered the offers with bids below US$15/ton. Open spec naphtha for front-month H2-December fell by over 12 dollars to US$888.25/ton.
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