SINGAPORE: The Asian naphtha crack rose for the fifth straight session on Wednesday to reach $139.98 a tonne, its highest since May 10, supported by demand.
The Philippines' JG Summit Petrochemical Corp has started up the country's first naphtha cracker after some delays and bought a 30,000-tonne spot cargo for early-July delivery from a Western trading house. The premium of the spot deal was unknown.
Traders expect steady demand from now as the petrochemical firm needs to import naphtha to feed the new 320,000-tonnes-per-year (tpy) cracker, which started up on June 8.
The unit is operating at about 70 to 80 percent of capacity.
Malaysia-based Titan has bought up to 400,000 tonnes of naphtha for July 2014 to June 2015 delivery to Pasir Gudang at a premium of $1 to $2 a tonne above Japan quotes on a cost-and-freight (C&F) basis, pegged to a 45-day pricing formula.
This was higher compared with price levels at parity when it paid in February for around 200,000 tonnes for April 2014 to March 2015 delivery.
Naphtha sentiment has been improving over the last few days as traders expect fewer cargoes arriving in Asia in July from Europe and the Mediterranean.
Asia is structurally short of naphtha. Traders at times curb flows of Western cargoes to Asia to prevent naphtha premiums from falling too drastically.
"I do not expect the naphtha market to be supported over the long run as the impact of additional supplies coming up will be felt by the end of the year," a Singapore-based source said.
Over in South Korea, YNCC has bought three cargoes of naphtha at a premium of about $12.25 a tonne to Japan quotes on a C&F basis.
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