Asian naphtha cracks down to 1-1/2 month low

Asia's naphtha crack fell for the second straight day to reach a near 1-1/2 month low of $87.60 a tonne on Wednesday as high oil prices and weak gasoline fundamentals weighed. But naphtha spot premiums stayed strong due to demand. South Korea's GS Caltex emerged to buy naphtha and paid a premium in the high teens per tonne level to Japan quotes on a cost-and-freight (C&F) basis, traders said.
The premium GS Caltex paid was similar, if not slightly higher, versus a deal SK Energy inked last Friday. Term premiums done on a C&F basis were also seen strong recently. Lotte Chemical, for instance, bought up to 900,000 tonnes of naphtha some two weeks ago for July 2018 to June 2019 delivery at premiums of $6 to $7 a tonne to Japan quotes on a C&F basis.
This was in sharp contrast to the discounts it paid last year for a 12-month contract expiring in August this year. Asia's gasoline crack fell for the tenth straight session to $7.28 a barrel, the lowest since May 15, on ample supplies. Adding to the supply is extra refinery capacity in Vietnam, where its second refinery is expected to be fully operational by early August. The 200,000-barrel-a-day (bpd) facility, owned by Nghi Son Refinery and Petrochemical LLC, is running at 55 percent capacity and is undergoing a long start-up process.
As for inventories, Japan's gasoline inventories rose 550,000 barrels to reach nearly a one-year high of 11.66 million barrels in the week to June 2, official data showed. The data came shortly after projections from analysts in a Reuters poll showed US gasoline inventories were seen higher last week. Saudi Aramco will be among the many suppliers selling gasoline to Pertamina through a six-month contract ending December, traders said. This will be the first term agreement between Aramco and Indonesia, they said. Japan's Cosmo Oil restarted a 102,000-barrels-per-day (bpd) crude distillation unit (CDU) at its Chiba refinery on Wednesday after it was shut for planned maintenance on April 19.