S Korea YNCC signs 12 month naphtha deal as Lotte Chemical in talks to buy cargoes

21-Jan-16

South Korea's YNCC had sealed a 12 month naphtha deal, while Lotte Chemical was in talks to purchase spot and long-term contract cargoes, boosting trade activities in a market recently marked by ample supplies, as per traders in Reuters. YNCC signed an April 2016 to March 2017 contract for an unspecified amount of naphtha for delivery to Yeosu at a discount of US$3-4/ton to Japan quotes on a cost-and-freight (C&F) basis. The petrochemical company has an existing 12-month contract sealed last August and it will expire in September this year, at a discount of US$3. Separately, Lotte Chemical is looking to lock in cargoes through a long-term contract to cash in on the current weak fundamentals, traders said in Reuters. It is also seeking a spot cargo for H1-March delivery to Yeosu, where it operates a 1 mln tpa naphtha cracker. Naphtha prices were weak since the start of the year due to an influx of cargoes arriving in Asia in January and February from the West including Europe and the U.S. A record high of 2.2 million tonnes of European, Mediterranean and U.S. naphtha were scheduled for January arrival and at least another 1.7 million tonnes for February. Spot prices for cargoes delivering in February to South Korea flipped into a discount early last week for the first time since early November. The weak fundamentals, which attracted buyers including Taiwan's CPC to seek long-term cargoes, weighed heavily on Asia's crack, the premium/losses of refining a barrel of Brent crude into naphtha, as per Reuters