Naphtha crack in Asia at 6 week high on limited supplies due to lower exports from Europe to Asia

26-Mar-14

Naphtha crack in Asia rose to a 1-1/2 month high of US$140.33/ton on Monday as supplies were squeezed due to lower exports from Europe to Asia, as per Reuters. South Korea's Lotte Chemical bought two naphtha cargoes for H1-May delivery, with the average premium of the cargoes estimated at US$17/ton to Japan quotes on a cost-and-freight (C&F) basis, traders said. This made it the highest spot premium seen in South Korea since December 20. Traders said South Korea's top petrochemical maker has likely bought up to 27,500 tons for delivery to Yeosu and similar volumes for delivery to Daesan. "Thinner supplies coming to Asia from Europe is the key factor which has created a lop-sided demand and supply balance," said a Singapore-based trader. Europe has likely channelled most of its naphtha into the gasoline pool as naphtha can be reformed into the motor fuel or be used a gasoline blendstock. Titan, Lotte Chemical's subsidiary on the other, has bought one cargo for first-half May arrival at Pasir Gudang but the premium was not known, traders said. Taiwan's Formosa in the meantime was still in the middle of its negotiations with sellers to lock in naphtha scheduled for June to November delivery to Mailiao.