Asia's naphtha crack recovered from a near two-week low to a two-session high of $76.75 a tonne on Tuesday, supported by demand from South Korea. Hanwha Total, LG Chem and GS Caltex were in the spot market looking to buy naphtha for first-half January delivery.
Hanwha Total bought heavy full-range naphtha at a low, single digit premium to Japan quotes on a cost-and-freight (C&F) basis while LG Chem had paid a small discounts to the same price formula, traders said. But traders expect naphtha supplies to build as the current stronger refining margins versus October will encourage refiners to keep their throughput high.
"There seems to be a lot of European naphtha coming to Asia. Refinery margins are good," said a Singapore-based trader. European naphtha arriving in Asia is expected to hit 1.3 to 1.4 million tonnes next month compared to 700,000 to 800,000 tonnes this month.
Japan's Idemitsu Kosan will expand the processing of propane by three or four times at its naphtha cracker to take advantage of cheap liquefied petroleum gas (LPG) prices and could lead to cost cuts of about $8.9 million a year. The work will be carried out next autumn and last about a month, during which time the cracker will be shut, a company spokeswoman said.
Indonesian Pertamina, Asia's top gasoline importer, is seeking 92-octane grade gasoline for first-half 2017 delivery through a tender closing on December 1, with offers to stay valid until December 9. It has another tender to buy 98-octane gasoline through either a three or six-month contract starting January 2017 which has closed on Tuesday.
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