Naphtha crack eases in Asia, but dip may be short terms

16-Apr-14

Asian naphtha crack eased to a two-session low of US$145.45/ton from a near three-month high the previous session, with buyers expected to move to the sidelines temporarily after completing May purchases, as per Reuters. South Korea's YNCC has bought 50,000 to 75,000 tons of naphtha for H2-May delivery through a tender, where the premium was estimated to be around US$15/ton to Japan quotes on a cost-and-freight (C&F) basis. This was higher than the US$11-12/ton premium it hadpaid about a month ago for a H1-May cargo. As per traders, Lotte Chemical and LG Chem have likely bought cargoes, also for H2-May delivery through private negotiations. Premiums were not immediately known. These purchases came shortly after Asia's top naphtha importer scooped up about 100,000 tons of naphtha, also for H2-May arrival at Mailiao, at premiums slightly below US$12/ton on a C&F basis. "The market has cooled down as buyers complete their monthly purchases, but it will pick up again," said a Singapore-based source. This is because June demand for naphtha is expected to stay firm as high freight rates to ship alternative feedstock liquefied petroleum gas (LPG) will prompt petrochemical makers to rely on the light fuel rather than switching to butane or propane. Some Asian petrochemical makers are able to replace 5 to 15% of naphtha with LPG.