Amid rising Brent crude, Asia's naphtha price rose on Wednesday to nearly a 10 month high, while cracks slipped just around 2% after touching 13 month highs as tight supply persisted, as per Reuters.
Japan's Mitsui Chemicals came forward to buy H2 March naphtha cargo, but details were scant. Traders estimated the premiums to be around US$23-24/ton to Japan spot quotes on a cost-and-freight (C&F) basis. South Korea's LG Chem paid a premium of US$20/ton on the previous day. Japan usually pays more than other Asian countries. This would make it the highest premium paid for any open-spec grade naphtha in North Asia since Dec. 22, 2009 when LG Chem paid $25-$26 for 75,000 tons of spot naphtha for February 2010 arrival.
It is expected that Asia will struggle with a naphtha supply shortage of up to 770,000 tons in March 2012, the biggest in over a year, due to maintenance of plants in Saudi Arabia, India and South Korea at a time of strong demand. However, with as seasonal demand for gasoline and liquefied petroleum gas (LPG) are expected to tail off, the naphtha and even the gasoline market is expected to undergo a downward correction.
The price for front-month sH2-March open spec naphtha rose to US$1054/ton, while cracks for H2-March slipped $3.50 to $167.65 a tonne premium, or two-day low.