Naphtha crack in Asia inches to near 2 week high of US$134.70/ton

26-Jun-14

Asian naphtha crack inched up for the third straight session on Wednesday to reach a near two-week high of US$134.70/ton as lower refinery run rates in Europe, caused by weak distillates margins, lent support, as per Reuters. Refinery run cuts in Europe will affect naphtha exports to Asia, which is structurally short of naphtha. But sellers' concerns over additional supplies in Asia loomed as South Korea's SK Energy was out to sell naphtha mainly for August to December lifting, with the volumes coming from a new condensate splitter starting up in July, traders said. A total of 10 medium-range vessel size cargoes are offered in the term contract, they added, which works out to an average of about 60,000 tons a month during the five-month period. Separately, LG Chem was estimated to have bought a total of about 75,000 tons of naphtha, or three cargoes, for first-half August delivery to Yeosu and Daesan at premiums of US$8.50 and US$9/ton to Japan quotes on a cost-and-freight (C&F) basis. This was 15-18% lower compared to what LG Chem had paid a week ago or a cargo scheduled for H2-July delivery.