Asia's naphtha extends losses on cracker shutdown

Asia's naphtha physical crack extended losses on Friday to reach its lowest in more than a decade as cracker outages depressed demand for naphtha, industry sources said. The benchmark open-specification naphtha margin had flipped into a discount on Thursday for the first time since January 2009.
On Friday it went deeper into discount, of $15.38 a tonne, its lowest level since December 2008 when the world economy went into a financial meltdown and petrochemical margins were negative. Industry sources said the current weakness is due mainly to the unexpected shutdown of a large-scale unit in South Korea which produces more than 1 million tonnes a year of ethylene, a building block for plastics.
Another unit in South Korea, which produces 1 million tonnes a year of ethylene, was shut down for longer than expected following a planned maintenance which started at the end of March. It could not be immediately confirmed if either unit has resumed production. Just weeks ago, Japan's Mitsui Chemicals also unexpectedly shut its cracker following a glitch but the unit has since restarted.
Other factors dragging the naphtha market down included recent lacklustre gasoline demand in the United States and ready supplies of cheaper alternative liquefied petroleum gas (LPG) supplies. Asia's gasoline crack rose to a two-session high of $2.45 a barrel but it was nearly 62 percent lower than a year ago due to high stockpiles across key regions.
Gasoline stocks held independently at the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub for instance had surged almost 29% in the week to Thursday to a three-month high of 1.08 million tonnes, data from Dutch consultancy Insights Global showed.
This mirrored the higher inventories in the US and Singapore. Taiwan's CPC sold a July cargo at premiums of $2.00 to $2.20 a barrel to Singapore quotes on a free-on-board (FOB) basis.
Chinese CNOOC and Hongrun had also sold cargoes for July and June loading respectively. Russia's Transneft Druzhba pipeline should be working normally in 6-8 months following an oil contamination, the Interfax news agency cited CEO Nikolai Tokarev as saying on Thursday. Royal Dutch Shell has increased the storage capacity at its Bukom refinery in Singapore by nearly 1.3 million barrels by building two crude oil tanks.