Asia Naphtha margins fall; sellers rely on gasoline demand from India

26-Sep-13

Asian naphtha and gasoline margins seem to be on a downward spiral for the third consecutive session on Wednesday, with the former hitting a 3-1/2 week low of US$100.95/ton on stubborn high supplies, as per Reuters. Malaysia-based Titan bought 50,000 tons of naphtha for H2- November arrival at Pasir Gudang at a discount of about US$2/ton to Japan quotes on a cost-and-freight (C&F) basis. Reliance Industries offered a 55,000 ton cargo for end October loading, bringing its total export volumes to more than 160,000 tons, largely unchanged from September quantities which were seen at its highest this year. Traders had expected the export-oriented refiner to keep its October exports high as overall Asian demand for gasoline was not as strong as before given that peak demand season is over. Naphtha can be reformed into gasoline or be used as a blendstock of the motor fuel. But gasoline sellers hoped that India's unusual gasoline demand could provide the much needed support for the motor fuel market. State-owned refiners HPCL and BPCL are out seeking a total of 53,000 tonnes of gasoline for October arrival at Vizag and Kochi respectively. "Although this is a small volume, they are not usual purchases. It will impact sentiment as a result," said a Singapore-based trader. India does not regularly import gasoline as it has sufficient to meet demand. The last time it drew heavily on gasoline imports was because of summer demand coinciding with refinery maintenance and outages This time however, BPCL plans to shut over half its 190,000-barrels per day (bpd) Kochi refinery for about 25-30 days from mid-November for routine maintenance. The refiner also expects to shut a 50,000 bpd crude processing facility and a 2,500 tons/day fluid catalytic cracker in Mumbai. HPCL on the other hand had been running its 160,000 barrels per day (bpd) refinery in Vizag at reduced rates after a fire hit the plant in August.