Asia's naphtha differential between second-half December and second-half January narrowed by US$2.50 to a discount of US$6.50/ton, the lowest discount in three weeks due to ongoing demand from China, as per Reuters.
Unipec bought at least 30,000 tons of naphtha on Monday for first-half December arrival in eastern China, adding to more than 300,000 tons it has bought for November to December delivery to eastern and southern China recently, traders said.
"The demand from China is genuine. The naphtha market is firmer now although still at discount levels," said a trader not related to Unipec. Some traders said the buying spree started earlier as official data showed that China imported a record volume of nearly 500,000 tons of naphtha in September, more than double the monthly average for the first eight months.
South Korea's Lotte Chemical also came forward to buy spot cargoes, with traders saying the petrochemical maker has bought at least one cargo for H2-December delivery at a discount of about US$8.50/ton to Japan quotes on a cost-and-freight (C&F) basis. This was costlier compared to the discount of US$13/ton it paid on October 20 for a H1-December naphtha cargo.
"There were not that many offers today," a North Asian trader said. Asia rarely sees spot prices at a discount but that changed in August after it received more supplies than it could digest from Europe, and from the Mediterranean in September and October. November volumes to Asia from the West will stay high. Indian Oil Corp (IOC) offered up to 41,000 tons of naphtha from Kandla and Dahej for November 19-21 loading in a tender closing on November 6. It has an outstanding tender to sell a 35,000 ton cargo for November 18-20 loading from Chennai. Including these, Indian naphtha exports are estimated to be close to 450,000 tons so far, Reuters data showed.