Asian naphtha eases to three-session low

Asia's naphtha crack slipped to a three-session low of $81.55 a tonne on Tuesday after gaining for seven straight sessions, but spot prices were seen higher than those inked last month. Demand from South Korea continued to emerge as buyers needed to buy fuel for second-half April delivery.
South Korea's Hanwha Total paid at least $8 a tonne to Japan quotes on a cost-and-freight (C&F) basis for cargoes scheduled for second-half April delivery. This was higher versus the $7 a tonne premium Hanwha had paid on February 27 for cargoes scheduled for first-half April delivery. GS Caltex was also seeking naphtha for the same period as Hanwha, traders said, adding that it had likely paid a premium of $10 a tonne to Japan quotes on a C&F basis.
This was also higher than the $7 a tonne GS Caltex had paid on February 22 for cargoes scheduled for first-half April delivery. The deals came a day after SK Energy paid about $10.50 a tonne to Japan quotes on a C&F basis for at least 50,000 tonnes of naphtha scheduled for second-half April delivery.
"Prices are higher as there are fewer European cargoes coming to Asia. Additionally, buyers are already maximizing on liquefied petroleum gas (LPG)," said a Singapore-based trader, adding that there's only that much LPG buyers can use to replace naphtha. Typically, Asian buyers would replace no more than 15 percent of their naphtha with alternative feedstock LPG. Using more LPG would affect their chain of petrochemical products' yield. A weekly report by the Thomson Reuters Oil Research team said that naphtha arriving from the West including Europe this month was seen at about 1 million tonnes.
This is lower versus the monthly volume for January and February. However, Middle Eastern exports for March arrival in Asia may hit a four-month high of nearly 3 million tonnes. India's Bharat Petroleum Corp Ltd (BPCL) has sold 40,000 tonnes of naphtha for March 18-19 loading from Kochi to oil major BP at premiums of about $19 to $20 a tonne to the former price formula on a free-on-board (FOB) basis, traders said.
This was higher compared with the $10 a tonne premium BPCL had fetched for a cargo sold previously for February 15-16 loading from the same port to Gunvor at $10. South Korea's LG Chem Ltd said it will resume operations of a 116,000 tonnes per year (tpy) naphtha cracker on Wednesday following a shutdown due to a brief power outage. Japan's Showa Denko plans to shut its 691,000 tonnes-per-year naphtha cracker at its Oita plant from March 8 to April 20 for scheduled maintenance.