Asia's naphtha crack retreated from a one-week high on Monday to a three-session low of $79.85 a tonne with demand mostly muted. Higher Brent crude was also weighed on the value. But fundamentals are stronger than a month ago as supplies tighten on repeated low levels of European cargoes arriving in Asia.
Although European cargoes arriving in Asia are expected to be higher in December versus November's quantities at below 800,000 tonnes, cargoes next month look set to stay below the monthly average of 2015 at 1.7 million tonnes. This has raised premiums for Indian sellers, with Mangalore Refinery Petrochemicals Ltd (MRPL) fetching around $12.65 a tonne to Middle East quotes for cargo sold to Trafigura for December 15-17 loading from New Mangalore.
Reliance Industries has sold a naphtha cargo for December 10-12 loading at premiums of $14 to $15 a tonne to Middle East quotes on a FOB basis. The spot deals could not be directly confirmed as sellers and buyers do not comment on their deals. Reliance sold a naphtha cargo about 1-1/2 weeks ago for early December loading at low teen levels to Middle East quotes on a FOB basis.
Philippines JG Summit may have awarded its term tender for a naphtha supplies arriving in Batangas in 2017 at discounts wider than $1.5 a tonne to Japan quotes on a FOB basis. While the spot premiums were on the increase, term prices remained in discounts because buyers were not convinced the market would stay strong in the longer term given new additional condensate splitter and refining capacities. The bulk of the oil product yield from a condensate splitter is naphtha. As of last Friday, Qatar has not restarted its newer Ras Laffan 146,000-barrels per day splitter following technical issues. Japan's top refiner JX Nippon Oil however has restarted its 63,500 barrels per day existing condensation splitter after it had to shut it due to a fire.
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