Naphtha crack in Asia rises to highest level since May 10; Philippines starts new cracker

12-Jun-14

Naphtha crack in Asia rose for fifth consecutive session on Wednesday to reach US$139.9/ton, its highest since May 10, supported by demand, as per Reuters. The Philippines' JG Summit Petrochemical Corp has started up the country's first naphtha cracker after some delays and bought a 30,000 ton spot cargo for early-July delivery from a Western trading house. The premium of the spot deal was unknown. Traders expect steady demand from now as the petrochemical firm needs to import naphtha to feed the new 32pa 0,000 tcracker, which started up on June 8. The unit is operating at about 70-80% of capacity. Malaysia-based Titan has bought up to 400,000 tons of naphtha for July 2014 to June 2015 delivery to Pasir Gudang at a premium of US$1-2/ton above Japan quotes on a cost-and-freight (C&F) basis, pegged to a 45-day pricing formula. This was higher compared with price levels at parity when it paid in February for around 200,000 tons for April 2014 to March 2015 delivery. Naphtha sentiment has been improving over the last few days as traders expect fewer cargoes arriving in Asia in July from Europe and the Mediterranean. Asia is structurally short of naphtha. Traders at times curb flows of Western cargoes to Asia to prevent naphtha premiums from falling too drastically.