Naphtha spot prices likely to remain unchanged in Asia this week

22-Nov-11

Naphtha spot prices are likely to move sideways in Asia this week amid weak demand, ample supply from Indian refiners and negative petrochemical margins, as per ICIS. Japan and Taiwan are not buying any spot naphtha, only South Korean cracker operators s are making small purchases. Open spec naphtha contract for H1-January fell by US$11/ton (€8/ton) from Friday to US$857-860/ton CFR (cost and freight) Japan on Monday. Naphtha crack spread vs January Brent crude futures was assessed at US$52.68/ton on Friday, down from US$36.75/ton in the previous week. On Thursday, the crack spread narrowed from US$57.05/ton, which was the highest since November 1.The spread between the naphtha contracts for H1-January and H1-February was assessed unchanged at parity on Friday. The inter-month spread between the naphtha contracts for the H2- January and the H2-February widened to minus 50 cents/ton from parity in the week earlier. High refinery runs in India and shrinking petrochemical demand will push Indian refiners to ship out 900,000 tons of naphtha in December, same as November levels. Indian naphtha exports in October were at 800,000 tons. A few regional crackers have reduced the rates or have brought forward plant maintenance because of a margins slump and prevailing low olefins prices. Mitsui Chemicals plans to further reduce run rates at its two naphtha crackers (450,000 tpa at Osaka and a 617,000 tpa at Chiba) this month to 85% from the current 90%. SK Energy has trimmed operating rate at its 190,000 tpa No 1 Ulsan naphtha cracker as planned to 70% until December. The cracker was running at 80% of capacity in October. SK will continue to run its 690,000 tpa No 2 cracker at the same site at full rates. Idemitsu Kosan reduced run rates at its 623,000 tpa naphtha cracker at Tokuyama to around 80% last week from 90%, following an outage at a downstream vinyl chloride monomer (VCM) plant. Tosoh Corp’s 550,000 tpa No 2 VCM line located in Nanyo stopped production on 13 November because of an explosion. Taiwan’s CPC Corp is planning to shut its 385,000 tpa No 4 naphtha cracker in Linyuan for maintenance on 10 December instead of February 2012 as originally planned. The shutdown is ahead of schedule mainly because of a bearish market.