Taiwan's Formosa Petrochemical Corp has cancelled a naphtha purchase tender for Jan. 11-25 delivery to Mailiao, as per traders in Reuters. This is the second buyer to decide against buying the light fuel in a week due to falling prices of Brent crude. Philippines' JG Summit last week cancelled a tender to buy naphtha for H1-January delivery to Batangas. Naphtha prices are closely tied to Brent, which has fallen for five-straight months, its longest losing streak since the 2008 financial crisis. Weak oil prices will prompt sellers to offload as much naphtha as possible to buyers to avoid being trapped in a downward price cycle.
"Falling Brent usually will lead to sellers nominating the maximum number of naphtha volumes to end-users, resulting in lower requirement for spot cargoes. Formosa likely expects to get more volumes from their suppliers," said a trader. Under normal contractual agreements, sellers have the option of supplying up to 10% more, or less, of the agreed naphtha volume to buyers.
02-Dec-14 
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