Asian naphtha crack rises from 2-1/2 week low

25-Jun-14

Naphtha crack in Asia rose 2.3% at the start of this week to US$131/ton from a 2-1/2 week low in the previous session, with traders attributing the rise to a technical correction, as per Reuters. "The crack value has been falling in the last few days and we are seeing a small correction today. But directionally, the prompt market is still bearish," a Singapore-based trader said. This was because supplies are expected to be ample as petrochemical makers are able to replace a small portion of their naphtha demand with liquefied petroleum gas (LPG) and two new condensate splitters are coming onstream in about a month's time in South Korea. The weaker market had exerted downward pressure on India's sales premiums. India's Oil & Natural Gas Corp (ONGC), for instance, sold 35,000 tons of naphtha for July 20-21 lifting from Hazira to Mercuria at premiums in the low $20s/ton level to Middle East quotes on a free-on-board (FOB) basis. This made it the lowest premium ONGC had garnered for a cargo sold of out of Hazira so far this year, Reuters data showed. "Demand for naphtha as a gasoline blend stock has came off in Europe and that has a knock-on effect on Asia. No one is keen on holding barrels at the moment," another Singapore-based trader said. Saudi Aramco's trading arm, Aramco Trading, stepped up its spot purchases and bought a total of 125,000 tonnes of naphtha from Bahrain and Qatar for mid-August and late-July loading respectively from Sitra and Ras Laffan last week.