SINGAPORE: Naphtha timespreads rebounded to a one-and-a-half-week high after physical demand for January cargoes began emerging from North East Asian cracker operators.
South Korea's LG Chem was heard seeking first-half January cargoes early on Thursday while rival petrochemical maker, Honam Petrochemicals, made a larger-than-usual purchase of January shipments on Wednesday.
Honam snapped up a total of 125,000-150,000 tonnes of first-half January naphtha shipments at a three-month-low premium of $9.50 a tonne to Japan quotes on a cost-and-freight (C&F) basis.
Traders said the larger-than-usual volume purchase could be to stock up for an expected increase in plastics demand ahead of the Lunar New Year festivities in February next year. Others said Honam could be buying more shipments due to the low premiums.
Reflecting the firmer sentiment for physical plastics demand ahead of the Lunar New Year in February, the January/February timespread contract surged $1.25 a tonne to its highest since Nov. 19, according to Reuters data.
The February/March timespread contract was similarly firmer in early trade.
In fuel oil, timespreads were mostly flat amid weak physical fundamentals. The viscosity spread, the differential between 180cst and 380cst, was mostly weaker across the 12-month forward curve with the prompt December contract dropping to a more than one-and-a-half-week low.
In distillates, timespreads were marginally firmer in early subdued Wednesday trade. The prompt jet fuel timespread, covered to parity after remaining in a contango price structure for the past five sessions. A larger-than-usual demand for prompt jet fuel had emerged from China Aviation Oil earlier in the week.
Front-month January Brent futures rose 11 cents per barrel to $109.78 per barrel from Wednesday's Asia close.
For a full list of swaps trades:
FUEL OIL
Fuel oil's December/January timespread was stable at a $4.00 per tonne contango. The January/February contract rose 25 cents to a $3.00 per tonne contango.
The February/March timespread was flat at a $2.50 per tonne contango.
The December crack was valued 54 cents wider at an $12.03 discount to Dubai. The January crack was 55 cents wider at a $10.59 discount to Dubai crude.
The December, January 180-cst fixed-price swaps were at $615.50 and $619.50 per tonne, down $3.38.
NAPHTHA
Naphtha CFR Japan's December/January timespread gained 50 cents to a backwardation of $7.25. The January/February and February/March contracts were $1.00-1.25 a tonne firmer at backwardations of $8.75 and $8.50, respectively.
The CFR January crack was 61 cents narrower at a discount of $6.75 and the February discount was 59 cents narrower at $6.85 per barrel to Brent crude.
The CFR December swap rose $7.00 to $934.50 per tonne, while the FOB Singapore December swap was 10 cents firmer at $101.60 per barrel.
GASOIL
Gasoil's December/January timespread was 3 cents higher in a contango of $1.45 per barrel. The January/February backwardation was 7 cents lower at 48 cents per barrel.
December's regrade, the spread between jet fuel and gasoil, was at a premium of 75 cents. The January contract was at a discount of 70 cents per barrel.
December and January fixed-price contracts were at $124.71 and $126.16 per barrel, up 31 and 28 cents, respectively.
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