October shipments from India at highest level for the year

25-Sep-13

October naphtha shipments from India are expected to reach 800,000 tons, the highest so far this year, as slower domestic demand prompts refiners to focus on exports, as per Reuters. The volumes are expected to be about 4% higher than September levels of of 770,000 tons, at a time when the market is well-supplied by cargoes from Europe and the Mediterranean. The ample supplies will keep a tight lid on spot premiums. India has already sold nearly half of the expected October export volumes at premiums averaging about US$25/ton to Middle East quotes on a free-on-board (FOB) basis, higher than the US$22 average premiums in September. These levels are about 65% lower than the record high levels for Indian naphtha in March, when heavy refinery maintenance schedules faced off against petrochemical plants running full tilt. Despite the shrinking premiums, Indian refiners will still likely need to push their naphtha exports to Asia as there are few domestic petrochemical units to soak up the supplies. "Indian premiums have been stable around the mid-$20s-a-tonne level. There are a lot of western supplies in the market but Formosa should come back from maintenance and CPC has a new cracker," said a Singapore-based trader, adding that premiums may not fall too sharply as a result of the returning demand. Taiwan's Formosa Petrochemical Corp has shut one of its three naphtha crackers, scheduled to resume at end-October, while competitor CPC is about to restart its new 700,000 tpa -tonne-per-year cracker after shutting it down for a routine check. Petrochemical makers in South Korea, Asia's top regional importer of naphtha, are still using LPG in their crackers, according to a trader in north Asia; while Taiwan's Formosa Petrochemical, the single largest importer, is also replacing a small portion of naphtha with LPG.