Asia's naphtha price and margins were at a six-month low of US$869/ton and US$55.85/ton respectively in anticipation of a downtrend in demand on cracker run cuts in South Korea and Taiwan, as per Reuters. South Korea's YNCC and top refiner SK Energy are cutting utilization rates at its crackers on weak petrochemical margins. YNCC will reduce utilization rates at its 1.9 mln tpa cracker complex to 90% starting end May for a month, while SK Energy will cut operations rates at its 200,000 tpa cracker to about 80% of its capacity starting in June.
Operations at its larger 660,000 tpy cracker will not be affected. South Korea is usually the last to reduce cracker runs as it has newer technology. Taiwan's Formosa, Asia's top naphtha buyer, had already cut run rates at its 2.93 ml tpa cracking complex last week to about 85%.
The weaker fundamentals have weighed on spot premiums, with Honam Petrochemical having bought about 50,000 tons of naphtha for H1-July arrival at premiums of about US$5/ton to Japan quotes on a cost-and-freight (C&F) basis, the lowest premium South Korea has seen in four months.