Naphtha crack in Asia for H1-Jan extends losses on expectations of more supplies

24-Nov-16

Naphtha crack in Asia for first-half January extended losses for the third straight day on Wednesday to reach a two-week low of US$76.4/ton on expectations of more supplies becoming available, as per Reuters. Traders said the market was disregarding Qatar's failure to restart a 146,000 bpd condensate splitter in mid-November, where the bulk of the oil product yield is naphtha.

South Korea's Lotte Chemical bought a naphtha cargo for H1-January delivery to Yeosu at a premium of about US$1/ton to Japan quotes on a cost-and-freight (C&F) basis and another cargo for the same period delivery to Daesan at a premium of US$1.50. The average premium that Lotte had paid was slightly lower when compared to LG Chem's purchases a day before. LG Chem had on Tuesday paid about 75 cents premium for a cargo scheduled for first-half January delivery to Yeosu and over US$2/ton for a cargo for the same delivery period to Daesan, traders said.

Taiwanese Formosa Petrochemical Corp, Asia's top naphtha importer, came forward shortly after Lotte Chemical's purchase to seek naphtha for H1-January arrival at Mailiao through a tender closing on Nov. 24. Demand was healthy as operational rates in crackers are mostly high due to firm petrochemical margins.