Naphtha crack in Asia halts 7 consecutive sessions of losses, recovers from a 1-1/2 year low

16-Jul-16

Asia's naphtha crack snapped seven straight sessions of losses on Friday, recovering from a 1-1/2 year low to a three-session high of US$39.58/ton, tracking Brent oil's gains, as per Reuters. Heavy supplies however persisted and traders expect the weak outlook to last through third quarter and could even extend into fourth quarter. Traders said the weak fundamentals could have prompted South Korea's Hanwha Total to withdraw an offer for naphtha scheduled for first-half August lifting although this could not be directly confirmed.

India's Reliance Industries went ahead with a sale of a 55,000 ton naphtha cargo for Aug. 3-7 loading from Sikka but at flat to a premium of US$1/ton to Middle East quotes on a free-on-board (FOB) basis. Not only was the price level at least four times lower than a 55,000 ton cargo sold for mid-July loading, it was also the lowest Reliance has achieved since late 2008 when the financial crisis hit, Reuters data showed. "Given the market situation, buyers will give low bids," said a trader. LG Chem on the other picked up 50,000 to 75,000 tons of naphtha at a discount of US$5.50- 6/ton to Japan quotes on a cost-and-freight (C&F) basis, making this the last tender for cargoes delivering to South Korea in second-half August. Prices in South Korea have fallen to a two-month low of US$6/ton on July 13.