Asia's naphtha crack surged 20% on Monday, its highest gain in a single session since July 20, to reach a week's high of US$65.6/ton, as lower European cargoes coming to the East and term purchases helped ease the ample supplies, as per traders in Reuters. Western cargoes arriving in Asia in September were expected to fall below the monthly average for the first 8 months of this year at nearly 1.7 mln ton.
"Spot demand has been muted as buyers were buying term cargoes last week. We will see deliveries of naphtha but under term rather than spot contracts," said a trader. "S-Oil's maintenance at a crude until also affects its naphtha supplies," the trader added. South Korea's Lotte Chemical, YNCC and LG Chem have bought cargoes for either a six or 12-month period but the volumes purchased could not be confirmed.
S-Oil, South Korea's third largest refiner by capacity, cut runs at its 669,000 bpd refinery due to maintenance at a crude distillation unit. This has affected its naphtha supplies, prompting Aramco Trading Co (ATC) to buy a total of 70,000 tons of naphtha feedstock for September loading from Hazira, India, to feed a condensate splitter, traders said. ATC is the trading arm of Saudi Aramco which owns the majority stakes in S-Oil.
But traders said it was too soon to determine the direction of the naphtha market where recent ample supplies have kept spot prices on a cost-and-freight (C&F) basis in discount levels since end June. Egyptian General Petroleum Corp (EGPC) has offered up to 265,000 tonnes of naphtha from Suez and Alexandria in two separate tenders. Kuwait, where its Shuaiba refinery was shut following a fire about two weeks ago, has offered a 50,000-tonne full range naphtha cargo for September 22-23 loading through a tender closing on September 1.