SK Energy inks 6 month naphtha deal with two Japanese buyers at US$5/ton discount

29-Jun-15

South Korea's SK Energy has signed a six-month naphtha deal with two Japanese buyers at a discount of about US$5/ton to Japan quotes on a free-on-board (FOB) basis, traders said in Reuters. This deals starts in July 2015. The discount on the deal is significantly narrower than the US$9 discount for a contract in H1-2015. The contract for August 2014-June 2015 was priced initially at a premium of below US$12/ton to Japan quotes FOB for cargoes lifting from August to December 2014. The price was revised in late 2014 to a steep discount of US$9/ton for cargoes lifting January to June 2015 as the market was flooded with cargoes heading for Asia from the west, including Europe and the Mediterranean. SK Energy, South Korea's top refiner, introduced the term contract last year when it started up a new condensate splitter in July. Traders said SK Energy had, in May 2015, negotiated with the two buyers on cargoes lifting in H2-2015, a time when the market was not yet battered by high supplies and was looking far better than it had in late 2014. But the market took a turn recently after 1.9 mln tons of European/Mediterranean cargoes were provisionally booked to arrive in Asia in July, the highest monthly western volumes expected to arrive in the East since September 2014.