Naphtha prices rise, cracks at 2-week high

17-Aug-11

Naphtha prices in Asia have risen for the fourth consecutive session to reach a near 14-day high on Tuesday, while cracks were at a two-week high as sentiment stayed firm on lower supplies ahead, as per Reuters. South Korea's YNCC bought 50,000 tons of open-spec grade for H2 September arrival at premiums of around A dollar/ton to Japan spot quotes on a cost-and-freight (C&F) basis. This was higher premiums of US$.50-1/ton paid by LG Chem on Aug. 4 for similar volumes. Stronger fundamentals due to reduced volumes from India and Japan are believed to be providing a boost to the market. India's September naphtha exports are expected to fall by about 15% to around 850,000 tons from August, when volumes were exceptionally high due to cracker outages and lower domestic demand. In Japan, weekly official data showed that its domestic naphtha stocks had fallen nearly 30% year-on-year to 1.49 mln kilolitres in the week ended Aug. 6. Market believes that Japanese refiners could be using heavy crude to obtain higher fuel oil yield. Usage of more heavier crude, results in less naphtha. Market players wait and watch developmenst at Fujia Dahua's 700,000 tpa paraxylene plant which has begun shutdown procedures after it was ordered to shut following public protest over a toxic spill. If this plant defers shipment of 100,000-120,000 tons/month, the impact of the markets will be remarkable as it is currently short of heavy naphtha. Price for front-month H2-September open spec naphtha climbed to US$935/ton, while naphtha cracks inched up to US$118.9/ton premium.