LG Chem inks deal for term supply of open spec naphtha for January-December 2011

07-Oct-10

South Korea's LG Chem has inked a contract for the term supply of 200,000 tpa of open spec naphtha for January-December 2011. As per Platts, this is half the amount of its purchases for January-December 2010. Purchases have seen a drastic cut due to refinery turnaround activities in South Korea next year, which will leave more domestic supply of naphtha available as feedstock for crackers. The contract for the naphtha with a minimum paraffin content of 70% was concluded at a discount of US$4/mt to the Mean of Platts Japan naphtha assessments, on a CFR basis, a smaller discount secured for its January-December 2010 term naphtha supplies. This could be due to the markedly lower volumes that LG Chem, South Korea's largest chemicals maker, sought for 2011. LG Chem's term suppliers for 2011 are traders Shell and Vitol, while in 2010, volumes were split between Daelim, Itochu, Trafigura, Hanwha and Shell. In South Korea, LG Chem will take down its 750,000 tpa ethylene capacity naphtha-fed Daesan steam cracker for turnaround sometime in 2011.