Naphtha crack in Asia rises to 5 session high as demand for NWE gasoline spikes in USA

10-Oct-16

Asia's naphtha crack rose to a five-session high of US$43.7/ton on Thursday of the previous week, reflecting a European market that firmed as shipments to the United States continued in readiness for potential refinery disruptions from Hurricane Matthew, as per Reuters. Depending on its grade, naphtha can be used as a gasoline blending component or as a petrochemical feedstock.
Yet the naphtha fundamentals indicate an oversupplied market, traders said. South Korea's Lotte Chemical saw a US$8/ton discount to Japan quotes on a cost-and-freight (C&F) basis for at least 50,000 tons of naphtha for delivery in H2-November. This was sharply lower than the US$3 discount Lotte Chemical paid on September 27 and the widest in South Korea since September 5. India's ONGC, meanwhile, sold 34,500 tons of naphtha to Vitol for loading October 27-28 from Hazira at a discount of US$3-4/ton to Middle East quotes free on board (FOB). This compared with a US$1.50 discount on a cargo ONGC sold to Lukoil for loading September 27-28 from Hazira.

Japan's biggest oil refiner, JX Nippon Oil & Energy Corp, said on Thursday that it expects to restart units, including a 36,000 barrels per day (bpd) catalytic reformer, at its fire-hit Muroran petrochemical plant in northern Japan on October 28. The Muroran plant supplies petrochemical feedstock to South Korea and produces gasoline and kerosene, as per Reuters. In Taiwan, Formosa Petrochemical Corp is expected to restore full capacity at its 540,000 bpd Mailiao refinery in December, when maintenance at its secondary units will be completed.