Naphtha price in Asia ends week at two-session low, cracks extend gains

01-Aug-11

Asia's naphtha price ended last week at a two-session low, but cracks extended gains to reach a three-session high, and timespreads improved further on easing tight supplies, as per Reuters. No Western barrels were seen coming to the region due to firm demand for naphtha for gasoline blending. Saudi Aramco offered a cargo of 50,000 tons of naphtha from Jubail for Aug. 21-23 loading, about two weeks after it sold some spot volumes out of Jeddah and Yanbu. Saudi Aramco is estimated to be expecting bids around US$15/ton premium, in view of a stronger market. South Korea's YNCC bought around 100,000 tons of naphtha for H1-September arrival at a discount of one dollar a ton to Japan spot quotes on a cost-and-freight (C&F) basis. This was higher compared to minus US$3/ton paid about two weeks ago for similar volumes for H2- August arrival. This was a day after Japan's Mitsui Chemicals bought an open-spec cargo at a slight discount to the same price formula. Prices for September are trending towards flat and above, higher than August prices, indicating that news on Formosa's outage seems to have limited impact on sentiment. Formosa sought to defer up to 100,000 tons of naphtha to October from August/September as the restart date of its No. 1 cracker is likely delayed after it suffered another outage. Premiums of medium-range cargoes loading from India were also seen high, with IOC fetching over US$20/ton for a Dahej cargo lifting in August. Heavy naphtha is now in tight supplies, with limited avails that is leading traders to buy heavy full-range naphtha and pay high prices for them. Heavy naphtha is for aromatics production while open-spec grades are for making olefins, namely ethylene and propylene. The price for front-month open spec naphtha for H1 September slipped to US$999.50/ton, while cracks gained over two dollars to US$121.63/ton premium.