Naphtha crack in Asia at near 2-1/2 week high of US$82.45/ton amid easing supply glut

16-Feb-16

Naphtha crack in Asia rose for the third straight session to reach a near 2-1/2 week high of US$82.4/ton at the start of the week on an easing supply glut, as per Reuters. The improved fundamentals for sellers resulted in South Korea's Lotte Chemical having to pay more for H1-April naphtha vs deals for March. The petrochemical maker has likely bought two cargoes totalling about 50,000 tons at flat to Japan quotes on a cost-and-freight (C&F) basis. This was sharply higher compared to a discount of US$5-5.50/ton it paid in early February for cargoes delivering in H2-March, traders said. However, this could not be directly verified as buyers do not comment on their deals. Other than Lotte Chemical, Hanwha Total was also in the market but it bought a cargo for H2-March delivery at a discount of US$2/ton to Japan quotes on a C&F basis. "April is looking tighter but there's still some unsold cargoes for March, which explained the discount," said a Singapore-based trader. India's Mangalore Refinery & Petrochemicals Ltd (MRPL) sold 35,000 tons of naphtha on February 12 to Vitol for March 13-15 loading from New Mangalore at a premium of about US$10.5/ton to Middle East quotes on a free-on-board (FOB) basis. This was about 42% higher than a cargo MRPL has recently sold for March 2-4 loading from the same port to Marubeni at a premium of US$7.40/ton. Essar also sold a naphtha cargo last week but for March 5-9 loading from Vadinar to Petro-Diamond at a premium of about US$7/ton to Middle East quotes on a FOB basis. Japan's Asahi Kasei Corp said it has shut its 504,000 tpa Mizushima naphtha cracker permanently on Friday as planned. This was part of the industry's move to tighten supplies amid declining demand for domestic petrochemicals.