Naphtha crack in Asia recovers from lows but supplies remain high

23-Feb-16

Asia's naphtha crack recovered from its lowest in nearly two weeks on Monday to reach a three-session high of US$62.3/ton, supported by reduced western naphtha volumes arriving next month, though supplies still look on the heavy side, as per Reuters . Some traders were convinced that no more than 1.5 mln tons of naphtha will arrive in Asia from the West including Europe in March. That compares with an estimated 1.7 mln tons arriving in February and 2.2 mln tons for January. The weak fundamentals had pulled down spot prices and sparked talk that South Korea's LG Chem may have bought a naphtha cargo at a discount of US$2/ton to Japan quotes on a cost-and-freight (C&F) basis, compared with last week's flat price for cargoes delivering in the same period. Malaysia-based Titan had bought a H1-April naphtha cargo on February 18 at a discount in the high-single-digit level to Japan quotes on a C&F basis, traders said. Both deals could not be directly confirmed because buyers do not comment on their trades. India's Oil & Natural Gas Corp (ONGC) sold 35,000 tons of naphtha for March 17-18 loading from Mumbai to Socar at a premium of US$5.80/ton to Middle East quotes on a free-on-board (FOB) basis. This was down from an average of about US$8.40/ton vs cargoes sold for March loading by other refiners, including Bharat Petroleum Corp, Essar Oil and Mangalore Refinery Petrochemicals Ltd (MRPL), which is a subsidiary of ONGC. The fresh premium was also the lowest for a naphtha cargo sold out of Mumbai by ONGC since September 2015. China has imported nearly 490,000 tons of naphtha in January, its lowest imported volume since October. Volumes are down 32.6% compared with the nearly 880,000 tons of gasoline exported in December.