Supported by demand from South Korea and an impending strike in France Asian naphtha prices have risen to a month high as naphtha cracks rose to more than a week high.
Honam Petrochemicals in South Korea bought three cargoes of naphtha totalling around 75,000 tons, following last week’s purchases by LG Chem and Samsung Total. Premium for the three cargoes has averaged to US$7-8/ton.
The CGT trade union called for a strike to spread beyond Total's French refineries to two of Exxon Mobil Corp’s refineries. This would impact gasoline supplies, and traders could move in to fill the gap by buying naphtha, which is used in the West for gasoline production and blending. The possible long-term supply disruption in France continued to support the Asian gasoline market, where cracks stayed above US$8 a barrel for the second straight session despite softer demand from Asia's two main importers, Indonesia and Vietnam. However, large volumes of Chinese gasoline could continue to flow into Asia due to high runs.