SINGAPORE: Asia's naphtha crack for second-half April buckled under the weight of persistent supply, falling to $48.83 a tonne, the lowest since Aug. 26 when the crack value for first-half October 2015 was at similar levels.
South Korea's Lotte Chemical came forward to buy two cargoes of naphtha for second-half April arrival at Daesan and Yeosu at discounts of $7.00 to $8.50 a tonne to Japan quotes on a cost-and-freight (C&F) basis, traders said.
That was the lowest price seen for cargoes to South Korea since Jan. 13, 2015, for a second-half February delivery last year, Reuters data showed.
The widening discounts reflected a deeper supply glut, traders said, and Western cargoes arriving next month in Asia were still at alarming volumes from a seller's point of view.
More than 1.2 million tonnes of naphtha have been provisionally booked for April arrival, with some traders putting the expected amount as high as 1.5 million tonnes.
As there is still time to ship cargoes to Asia for April arrival, some traders were expecting the final volume to be more than 1.5 million tonnes.
"This is a bit more than we need as the market is not tight, for sure," an industry source based in Singapore said.
In Japan, ethylene production in February fell nearly 11 percent from a month ago and about 5 percent from a year ago, official data showed.
Ethylene, a building block for plastics, is made from naphtha.
Japan's Asahi has shut a cracker permanently and Mitsubishi Chemical is expected to close one of its crackers permanently too in May.
But Japan is also planning on shutting more crude units over the next few years.
GASOLINE EXTENDS GAINS
Asia's gasoline crack rose for the fourth straight session to reach a 1-1/2 week high of $8.31 a barrel.
Singapore cash deals stayed brisk, with 350,000 barrels traded compared with 300,000 barrels in the previous session.
In the first eight days of March 1.6 million barrels of gasoline have been traded on the cash market, almost as much already as the 1.65 million traded in the whole of February.
In Malaysia, Petron sought gasoline through a one-year contract which traders said was rare as it had previously preferred short-term contracts of six months.
It was seeking up to 250,000 barrels of 95-octane and 50,000 barrels of 97-octane grades a month for one year, starting June 1, 2016. The tender closes on March 23.
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