Over 30% of Japan’s naphtha cracker capacity has been shutdown after the massive earthquake and tsunami, bringing down Asia's naphtha crack to its lowest in just over one week as per Reuters. In Asia’s naphtha market, Japan plays the demand side. If plants in Japan are shutdown, then demand in the region is expected to fall. JX Nippon Oil & Energy Corp is working to shut all units at a 404,000 tpa naphtha cracker at Kawasaki. Mitsubishi Chemical has halted operations of two naphtha crackers with capacity to produce 826,000 tpa of ethylene at Kashima after a power outage. Maruzen Petrochemical shut a 480,000 tpa unit in Chiba as well as a 690,000 tpa cracker at Keiyo. However, two Indian refiners sold cargoes for March-April loading at strong premiums, in a bid to cover their short positions due to lower supply from the Gulf and Europe. Saudi Arabia and Kuwait have scheduled refinery maintenance scheduled for next month while the US has diverted 300,000-400,000 tons of European cargoes for late February to early March loading, away from Asia. In another report, five petrochemical companies under Maruzen Corp., Idemitsu Co. Showa Denko Corp, and Mitsubishi Chemical Corp. have stopped operations to conduct inspections. It is estimated that an annual capacity of 1.7 million tons of ethylene could be affected. Oil & Natural Gas Corp (ONGC) sold 35,000 tons of naphtha for April 1-2 loading to Shell at the highest premium in a year, slightly above US$25/ton to Middle East quotes free-on-board basis (FOB). Bharat Petroleum Corp Ltd (BPCL) sold a 30,000 ton cargo for March 28-30 loading from Mumbai to Cargill at a premium of near US$22 a barrel to Middle East quotes on a FOB basis.
Open Spec naphtha for front-month H2-April fell by US$27 to US$990/ton, its lowest since March 1. Cracks have dipped by over 12 dollars to US137.25/ton