Naphtha in Asia at week's high

29-Nov-12

Naphtha price in Asia was at a week's high of US$948.50/ton on Tuesday but the intermonth premium fell 12.5% to its lowest in three months at US$10.50/ton as weak petrochemical prices hit sentiment, as per Reuters. The intermonth premium refers to the difference between front-month H1-January and H1-February prices. Asia's top naphtha buyer Formosa Petrochemical is seeking to delay receiving naphtha shipments to January 2013 from H2-December due to sufficient stocks. Its 2.93 million tpa naphtha cracking complex was operating at 90% of capacity as weak ethylene/propylene margins prevent the facility from scaling to full capacity. Traders added that South Korea's YNCC will likely trim operating rates at its 1.9 mln tpa cracking complex next month. But traders, as well as buyers, expect the weakness in the market to be short-term as manufacturing activities in China, Asia's top petrochemical importer, will likely pick up ahead of the Lunar New Year in February. Q1-2013 is expected to be strong in Asia. Limited naphtha cracker maintenance versus heavy refinery turnaround in South Korea next year is also expected to create a tight naphtha supply situation. Among the refiners set for maintenance is SK Energy. It plans to shut two of five crude units at its Ulsan plant in H1-2013. A 110,000 barrels per day (bpd) No. 2 CDU is expected to be offline for about a month from mid-March to mid-April. A 170,000 bpd No. 3 CDU is expected to be shut for about a month from May to June.