Naphtha price in Asia rebounds from a near nine-month low, margin spike

10-Apr-13

Naphtha in Asia rebounded from a near nine-month low on Tuesday to reach a two-session high of US$890/ton, while its margin touched a six-session high of US$101.60/ton, supported by demand, as per Reuters. Petrochemical maker YNCC bought around 50,000 tons of naphtha for H2-May arrival at Yeosu at premiums of about US$18/ton, level to Japan quotes on a cost-and-freight (C&F) basis. Although these were the lowest premiums seen in South Korea in more than two months, some traders said prices could be bottoming out as the market had already factored in most of the bearish information. "All the bearish factors have been accounted for, such as crackers' reduced run rates, stable alternative liquefied petroleum gas (LPG) prices and high western exports to Asia," said a Singapore-based trader. YNCC is likely the only operator in South Korea to have cut runs at its 1.9 mln tpa cracking complex to about 90% of its capacity since second-half March. The cuts follow a deadly explosion at a chemical unit owned by Daelim, which is the co-owner of YNCC with Hanwha Chemical. Abu Dhabi National Oil Co (ADNOC) in the meantime has concluded its May 2013-April 2014 contracts with its Asian buyers at record premiums of US$35.50-37/ton to its own price formula on a free-on-board (FOB) for three naphtha grades. Splitter and low-sulphur naphtha were concluded at US$35.50/ton premium each, about 51% higher than its previous contract for the two grades lifting April 2012 to March 2013. Its pentane naphtha contract for May 2013 to April 2014 was inked at US$37/ton premium, up 45% from about a year ago.