Naphtha price in Asia at 4 session high, margin at five-week high on tighter supplies

11-Dec-12

The Asian naphtha price was at a four-session high of US$948/ton on Monday while its margin hit a five-week high of US$142/ton on tighter supplies ahead due to refinery maintenance in India and North Asia starting early next year. The strong fundamentals have countered earlier concerns of squeezed petrochemical margins and buyers were again in the market forking out high premiums to secure cargoes. Honam Petrochemical bought 75,000 tons of open-spec naphtha for H2-January arrival at premiums around US$16.50- 17/ton to Japan quotes on a cost-and-freight basis, making this the highest premium seen in South Korea in nearly four weeks. Saudi Aramco has concluded its term deals, of which four of its five naphtha grades were sealed at new record premiums of US$32-36/ton to its own price formula on a free-on-board (FOB) basis. Some supply shortage is expected as cargoes for H2-January delivery seems to be tightening due to refinery maintenance including that in India. Arbitrage cargoes are also expected to be limited. India's Reliance, which has sold about 220,000 tons- about 27% of the total December naphtha from the country, is to shut a crude unit for a 40-day maintenance starting in January.