Naphtha crack in Asia at 26 month lows amid low demand and abundant supplies

27-Oct-14

Naphtha crack in Asia extended losses to hover at 26 month lows of US$60.9/ton as demand from North Asia failed to make a significant dent in high supplies, as per Reuters. South Korea's LG Chem bought two naphtha cargoes totalling an average of 50,000 tons for H1-December delivery. Traders said that, depending on the grade of the cargoes, LG Chem would have paid a discount of about US$14/ton to Japan quotes on a cost-and-freight (C&F) basis for open-spec naphtha and US$11.50/ton discount for naphtha with a higher paraffin content. LG Chem does not comment on its deals but the purchases came shortly after YNCC locked in three cargoes, also for first-half December delivery. Despite the demand, traders said it was insufficient to soak up the stockpiles because Asia has been receiving more cargoes than it needed from Europe and the Mediterranean. "Supplies are still heavy. Demand has to increase but there is a maintenance coming up at LG Chem. Every purchase counts," said one trader based in Southeast Asia. LG Chem this week started scheduled month-long maintenance at its 1 mln tpa cracker in Yeosu. Adding to this was an unplanned shutdown of Titan's two crackers in Pasir Gudang on Wednesday after a power outage.