Jan cargoes continue getting picked up by South Koreans: Naphtha near two-week highs

Asian naphtha prices rose to near a two-week highs on Tuesday, while timespreads and cracks were at at five-week high as South Korean buyers continued to pick up January cargoes, as per Reuters. LG Chem and Honam Petrochemical have bought a total of atleast 75,000 tons, while Samsung Total has bought around 25,000 tons. Honam bought a cargo for Yeosu arrival in H1-January at a slight discount to Japan spot quotes on a cost-and-freight (C&F) basis, and another cargo for the same arrival time in Daesan. Though price of the Daesan cargo is undisclosed, traders estimated a 25-50 cents premium as cargoes shipped to Daesan usually incur a higher cost than to Yeosu. LG Chem has bought more than one cargo for Yeosu arrival for the same time frame at a discount of about US$1/ton. The naphtha market appears to be stronger with cracks and timespreads improving- this may not be due to better demand for petrochemicals. Demand for plastics is not showing signs of improvement. This led to talk that traders could be trying to pry open the arbitrage window to move European cargoes to Asia. Europe has excess supplies and traders could be trying to push up the Asian prices in order to make the arbitrage flows work. It is a case where traders see more value in moving their cargoes to the East than leave them in the West where prices could be worse. The price for front-month H1-January open spec naphtha rose by over seven dollars to US$880.25/ton, highest since Nov. 17. Cracks for H1-January rose to US$61.85/ton.
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