South Korea Lotte buys 130,000T naphtha

SINGAPORE: South Korea's Lotte Chemical has bought a total of 130,000 tonnes of naphtha so far for first-half April arrival on a cost-and-freight (C&F) basis, of which about 55,000 tonnes will be supplied by Saudi Aramco, traders said on Wednesday.

Saudi Aramco is gradually becoming a more prominent supplier of C&F cargoes after it had set up a trading entity.

This makes it more accessible to South Korean buyers who buy their spot cargoes mainly on a C&F and not free-on-board (FOB) basis.

Buying cargoes on a FOB basis would mean that the buyer has to arrange most of the logistics themselves, including chartering a vessel to arrive at the seller's port on time.

It was unclear how much Lotte Chemical, South Korea's top ethylene maker by capacity, had paid for the long-range vessel arriving from Saudi Arabia. It was also not clear when the purchase was made.

It bought 75,000 tonnes of naphtha from trading houses on Wednesday for delivery to Daesan and Yeosu at premiums of $34.50 to $35.50 a tonne premium to Japan quotes on a C&F basis.

This reflected a 4.1 percent fall in premiums when compared to Lotte Chemical's previous purchase of 25,000 tonnes made a week ago for a second-half March arrival.

The weaker premiums could be a sign that some sellers were expecting softer demand ahead as buyers may have locked in most of the cargoes they needed in view of the current tight supplies.