Naphtha prices in Asia fell to its lowest in 1 ½ weeks on Wednesday, while cracks hit a 5 week low and intermonth spreads fell to six-week low as a cracker outage at Formosa weighed on sentiment Reuters. Taiwan's Formosa shut a 700,000 tpa No. 1cracker last week following a fire at a liquefied petroleum gas (LPG) pipe, and the unit is to stay offline until H2-June.
South Korea's Honam, which cancelled a tender to buy naphtha on May 12 due to high offers, benefited from the weaker market and bought a cargo for H2-June arrival at premiums estimated at US$9/ton to Japan spot quotes on a cost-and-freight (C&F) basis. This was sharply down compared with US$17-21/ton Honam paid on May 3 for about 50,000 tons for H1-June arrival.
The sluggish market had also affected bids in Tasweeq's term tenders, causing the state-owned firm to cancel the sales. It will instead try to incorporate the volumes into its existing contracts or seek new buyers when it holds its quarterly reviews.
Front-month H1-July prices fell by about twenty dollars to US$958/ton, its lowest since May 6. Naphtha cracks fell to US$124/ton premium, lowest since April 12.