Naphtha crack in Asia stable amid muted demand from North Asia following purchases

05-Jun-15

When compared to the previous session, naphtha crack in Asia was stable at US$91.7/ton, with muted demand seen from North Asia following a series of purchases last week, as per Reuters. Between May 27 and 29, Taiwan, Japan and South Korea bought about 175,000 tons of naphtha for July delivery. Lotte Chemical on May 29 bought 50,000 tons of naphtha for H1-July delivery at premiums of about US$1.75/ton to Japan quotes on a cost-and-freight (C&F) basis, down from the US$2.75-3/ton premium it paid on May 18. The lower premiums reflected weaker fundamentals as supplies were seen building up against lower demand caused by cracker maintenance in Taiwan and alternative liquefied petroleum gas coming in this month to replace a portion of naphtha used to make petrochemicals. India's June exports, including outstanding sales tenders, totalling nearly 530,000 tons were the highest seen since October 2014. "India's exports usually go higher during the monsoon period," said a Singapore-based trader, adding that this could continue for a few more months. The monsoon, which is usually from July to September, could affect farming activities and in turn lead to lower demand for fertilisers. Some of the fertilisers plants in India use naphtha as feedstock instead of gas. Indian Oil Corp (IOC) has offered 35,000 tons of naphtha from Chennai, bringing its total exports for June to more than 140,000 tons, the highest volume offered by the refiner in over two-and-a-half years, Reuters data showed. IOC has offered the cargo for June 24-26 loading from Chennai through a tender closing on June 3.