SINGAPORE: Asia’s naphtha crack recovered on Wednesday although gasoline margins fell for a fourth straight session as the coronavirus pandemic reduced petrol demand in countries such as India, Malaysia and Vietnam.
The naphtha market could be “neutral to slightly constructive” in the second half of July as petrochemical demand remained firm, while it is no longer economical for cracker operators to switch to liquefied petroleum gas feedstock, a trade source said.
A second trader said: “The general market sentiment is strong with expected better demand from Korea and crackers coming back but this could get capped with more arb flow.”
LG Chem and GS Caltex will be starting up a new cracker each in June while several ethylene plants in the region will return from maintenance.
Traders estimated that about 2 million tonnes of western naphtha are expected to arrive in Asia in June.
More of the supply would be heavier grades, the second source said.
This would be down from the 2.4 million tonnes in May but similar to April’s volume, data on Refinitiv Eikon showed. South Korea’s YNCC is seeking naphtha for second-half July delivery while India’s HPCL is offering 25,000 tonnes of naphtha for June 15-17 loading from Mumbai. Both tenders closed on Wednesday.
Japan’s gasoline stocks edged up in the week to May 29 while naphtha inventories dipped, data released by the Petroleum Association of Japan (PAJ) showed on Wednesday.
Gasoline stocks in the United States fell by roughly 1.4 million barrels last week, according to a Reuters poll on weekly oil inventories data from the US Energy Information Administration due later on Wednesday.
At UAE’s Fujairah, light distillates stocks rose by 98,000 barrels to 5.225 million barrels for the week ended May 31, according to industry information service S&P Global Platts.
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