Philippines' JG Summit Petrochemical Corp buys first naphtha cargo from spot market

17-Dec-13

The Philippines' JG Summit Petrochemical Corp, a unit of JG Summit Holdings Inc, has bought its first naphtha cargo from the spot market at about US$14/ton above Japan quotes on a cost-and-freight (C&F) basis, as per Reuters. JG Summit bought the cargo as it prepares to start up its naphtha cracker, the first in the country, which will have a capacity of 320,000 tpa of ethylene. The premium of the medium-range vessel cargo scheduled for H1-February arrival reflects a strong market, where demand is firm amid weak monthly supplies from India. Although the Philippines has refining capacities, traders added that the supply flow from local refiner Petron Corp is currently insufficient to meet JG Summit's total demand. Petron has recently floated a tender to sell 120,000 barrels of naphtha for Jan. 7-9 loading which is expected to be awarded this week. This volume was less than half the amount JG Summit bought for February. Petron, however, is to undergo a refinery upgrade at its 180,000 bpd plant which would boost its refining capacity output by 40%. Logistics could be another deterrent as Petron sells only on a free-on-board (FOB) basis, meaning that buyers would need to find their own ships to lift the naphtha cargo.