Supply glut tanks Asia's naphtha crack by about 40% from a month ago

15-Jul-15

Asia's naphtha crack was flat at US$63.4/ton at the beginning of the week, but is down by about 40% from a month ago amid high supplies and slow buyers movement amid the glut, as per Reuters. With this, the price of alternative feedstock liquefied petroleum gas (LPG) is increasingly non-competitive versus naphtha. As a result, buyers are expected to switch to LPG, and sellers expect naphtha demand to improve as buyers Asian petrochemical makers are able to replace 5 to 15% of their naphtha feedstock with LPG when prices of the latter become attractive compared to naphtha. "But the naphtha-LPG price gap is too narrow, making it non-competitive for most buyers to rely on LPG," said a trader based in a North Asian country. Hindustan Petroleum Corp Ltd (HPCL) cancelled a tender to sell up to 30,000 tons for late July loading from Mumbai and issued a tender to sell similar volumes for August 2-5 lifting from the same port instead, traders said. The new tender is valid until July 14. Egyptian General Petroleum Corp (EGPC) sold 25,000 tons of naphtha for July 13-15 loading from Suez to India's Reliance Industries at levels in the low teens a tonne to Middle East quotes on a free-on-board (FOB) basis, traders said. The new premium reflected a sharp drop of 31-37% in value for EGPC as it had previously sold at least two July cargoes at premium of US$16 and US$21/ton, Reuters data showed. Chinese trader Unipec is a dominant buyer of EGPC's naphtha cargoes this year.