Naphtha margins in Asia sink to 27 week lows

A large fraction of Asian naphtha demand is expected to be removed on a cracker outage and run cuts. As a result, naphtha prices in Asia lingered at its lowest in 1-1/2 years on Friday while margins sank to a 6-1/2 month low, as per Reuters. Intermonth premiums - the difference between prices for front-month H2-July and H2-August - were at US$1.50/ton, more than 10 times lower compared to three months ago. Asia's top naphtha buyer Formosa has shut the largest of its three crackers at a time when South Korea's YNCC, SK Energy and Thailand's IRPC have reduced run rates to combat bad petrochemical margins. YNCC had cut operational rates at its 1.9 mln tpa cracker complex to 90% since May 25. SK Energy and IRPC will implement reduction in run rates this month. Formosa’s 1.2 million tpa No. 3 cracker is expected to be offline for about two weeks. In contrast, spot exports are rising as high contract premiums have resulted in lower volumes being termed up.
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