GS Caltex, which needs around 3 million tpa of naphtha to run its new splitter, usually buys 10 cargoes of full-range naphtha a month. However, the South Korean company has managed to secure only 8 lots for March arrival at more than US$10/ton premiums to Japanese spot quotes, cost-and-freight (C&F) basis, as prices spiked to double-digit premiums within a month due to thin regional supplies. Asian naphtha has soared in recent weeks, triggered by supply delays from the Middle East and India. Demand is also healthy due to firm petrochemical margins as ethylene has been hovering at high levels of $1,300-$1,400 a tonne in Asia, encouraging many naphtha crackers to ramp up production. Three Northeast Asian petrochemical makers have delayed their naphtha cracker maintenance from the first-half of this year, requiring them to seek more feedstocks.
GS Caltex plans to run the splitter at minimal level next month- at 50,000 bpd, because of the higher cost of naphtha, cutting operating rate of its 70,000 bpd naphtha splitter by nearly 30% next month. The reduced operation will further tighten supply of light and heavy naphtha needed by Asian petrochemical makers, who have been running their plants at high rates to take advantage of strong petrochemical margins. GS Caltex ships heavy naphtha into a 35,000-bpd reformer in the eastern Chinese port city of Qingdao for the petrochemicals industry to produce benzene, toluene, and xylene (BTX), while it sells light naphtha domestically for production of ethylene.
GS Caltex's naphtha supplies to Korean crackers will also drop as its 130,000-bpd No.2 and 150,000-bpd No.3 crude distillation units (CDUs) will close for regular maintenance in April and May, respectively, industry sources said.
In addition, South Korea's number-two oil refiner has scheduled to shut down two crude units in April and May, and will also slash naphtha supplies to other domestic crackers.
09-Feb-07 
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