Asian naphtha prices rose on Monday, reflecting higher crude prices, and its premium against Brent held steady on ample supplies, but traders said the market might bottom out this week on easing demand fears.
The front-month open-spec naphtha contract for first-half August moved up to $670.50 a tonne on a cost-and-freight (C&F) basis, from $665.00 the previous session.
The ICE Brent/naphtha crack - the premium paid for naphtha compared with Brent prices - steadied around $140-$141 a tonne for first-half August. ICE August Brent crude was down 56 cents to $70.62 a barrel by 0330 GMT, but was higher than Friday's Asian trading.
Adding pressure to the already sufficiently supplied market, CPC Corp, Taiwan, which normally buys one 30,000-tonne cargo of heavy naphtha a month, will not be making its usual purchase in August due to sufficiently high inventories, according to a company source earlier in the day.
The weak naphtha market helped CPC to buy 75,000 tonnes of full-range naphtha for first-half August delivery at $5-$6 a tonne discount to Japan spot quotes versus the $3.00-3.50 premium it had paid for a July stem.
But traders said demand would start to emerge this week as South Korea's Yeochun Naphtha Cracking Centre (YNCC) resumed full operations at its 550,000 tonnes per year (tpy) No 2 naphtha cracker on Monday. Taiwan's Formosa Petrochemical is also scheduled to run its new 1.2 million-tpy cracker within two weeks. The contango between the first halves of August and September held steady at $1 a tonne.
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