Leading Middle Eastern naphtha supplier Kuwait Petroleum Corp (KPC) had proposed a premium of US$26 above Middle East quotes on FOB basis for its April 2010-March 2011 cargoes. The best bid heard for this was at much lower level of US$18/ton premium. Subsequently, KPC is heard to have reduced the same offer to US$24/ton.
The high offer is contrary to weakening market outlook in anticipation of a demand cut caused by cracker maintenance schedule in Asia in March. However, few market players opine that since this is an annual contract, using current spot premiums as a benchmark to measure a long term offer may not be proper. Since KPC’s newly started aromatics plant require naphtha as feedstock, the Kuwaiti major is struggling with limited full-range naphtha supplies.