A 40% drop in naphtha exports to Asia in being anticipated as refiners lift supply and prices in Singapore discourage shipments from Europe, as per Bloomberg. Based on a survey of four Europe based traders, cargoes of at least 210,000 metric tons have been booked to Asia for loading in early June. Total exports for June may reach 300,000 tons vs an estimated 500,000 tons in May. Naphtha for delivery in H2-July sold at a discount, the first since March 29, as compared to a premium of US$27.50 on April 27.
Rising industrial production in China and India bolstered Asian demand for naphtha- China’s output rose 17.8% in April y-o-y, while India’s manufacturing growth accelerated in May to the fastest pace in more than two years. Refiners in Korea and Japan are resuming operations after maintenance shutdowns, bringing back an estimated 700,000 bpd of processing capacity in July, leading to lower shortage next month.
Japan’s Cosmo Oil Co. plans to start a unit at its 220,000 bpa Chiba unit June 24 after shutting on April 14. JX Holdings Inc., Japan’s biggest refiner, will resume production from a condensate splitter at its 205,200 bpd Mizushima plant in June as well as units at its 270,000 bpd Kashima plant in early July. The company will start units at its 160,000 bpd Oita plant and its 145,000 bpd Sendai plant in June. Nansei Sekiyu K.K. is to start its 100,000 bpd Nishihara refinery on July 2 after maintenance. Toa Oil Co Ltd. is to resume production from a unit at its 185,000 bpd Keihin at the beginning of June. TonenGeneral Sekiyu K.K. plans to start units at its 335,000 bpd Kawasaki plant.
Naphtha refining margins fell last week, as petrochemical producers sold off inventories and bought new stock at lower rates to cut average costs. Prices and margins of key chemicals have seen a broad decline this month, triggered by declining crude oil prices, which has led to destocking efforts to clear higher priced inventories.