Producers of naphtha in Middle Eastern countries of Kuwait and Saudi Arabia are facing a hard time negotiating with buyers from Taiwan and South Korea for December 2008-November 2009 naphtha supply. As demand for plastics products ebbs in USA and Europe plunging polymer demand in China, deals are being reported to be taking more than usual time to conclude, with expectations of deep discounts, as per Reuters. Deal conclusion will take longer than usual as lackluster demand is anticipated to continue through the first half of next year.
In fact, Bahrains' state-owned Bahrain Petroleum Co has deferred offers until the 3 giants in the region including KPC and ADNOC manage to conclude their sales- which could be early next year. The gloomy market has forced Saudi Aramco to switch from its normal on-site discussions for January-June 2009 term supplies to using the telephone to save on travel costs for buyers. On the buyer's side, few may not renew the contract due to the unforeseen petrochemicals demand. In fact, select buyers who are saddled with huge stockpiles are converting to sellers by trying to dispose off their naphtha inventories instead of processing it.
Will the deteriorating outlook of the petrochemical sector cause sellers to offer naphtha at a discount? Few buyers seem to be expect a double-digit discount of more than US$20/ton to Middle East quotes, on a free-on-board (FOB) basis. This will be an interesting situation for KPC, as it has not sold its term cargoes at a discount before.
07-Nov-08 
{{comment.DateTimeStampDisplay}}
{{comment.Comments}}