Asia to receive 2 mln tons of deep-sea naphtha supply from the West in first month of 2015

22-Dec-14

Asia is set to receive almost 2 mln tons of deep-sea naphtha supply from the West in January, as per traders in ICIS. At the time of declining crude-led naphtha prices, this is an almost 10% rise from levels of this month. 1.8 mln tons of arbitrage inflows are bound for Asia in December from NW Europe, Mediterranean, Russia and USA. US crude futures fell to below $60/bbl amid oversupply and bearish demand. H1-Feb on-spec naphtha contract fell by US$8-9/ton from Thursday to US$482.50-485.50/ton CFR Japan on Friday in response to overnight crude losses. Meanwhile, demand is seen stable-to-soft on prospects on run cuts in the region. Taiwan’s Formosa Petrochemical Corp (FPCC) plans to reduce the run rates at its three crackers in Mailiao to around 90% from Jan 1, from around 100% currently due to weaker margins, according to a company source. Combined ethylene capacity of the three crackers is pegged at 2.93 mln tpa. The company also plans to replace naphtha with liquefied petroleum gas (LPG) for around 10% of the total feed in January. Cracker margins have been under pressure from a recent collapse in regional propylene prices, and generally weaker prices for other olefins and aromatics. Japan’s Asahi Kasei Chemicals plans to operate its 500,000 tpa naphtha cracker in Mizushima at reduced rates in the first quarter because of reduced demand from its downstream affiliates, a source close to the company said on 19 December. The company will cut in early January its cracker operating rates to around 90% capacity from 90-95% currently, in view of the weak conditions in the downstream styrene monomer (SM) market, the source said. The source added that the cracker run rates will likely remain at reduced levels through to March as some of its downstream operations are scheduled for maintenance late in the first quarter.