SINGAPORE: Asia's naphtha crack rebounded from a 17-month low on Thursday to touch its highest in two sessions at $44.28 a tonne, but was still far below this year's high at over $145 as heavy supplies put pressure on the market.
This has been clearly reflected in spot prices for cargoes on a cost-and-freight (C&F) basis, which have been at discounts since late April.
South Korea's YNCC has bought around 75,000 tonnes of naphtha for second-half July arrival at Yeosu at a discount of about $4.75 a tonne to Japan quotes on a cost-and-freight (C&F) basis, traders said.
This could not be confirmed as officials at South Korean petrochemical firms do not comment on feedstock purchases.
The current discount was slightly narrower than the $5 a tonne YNCC paid on May 17, also for naphtha scheduled for second-half July.
Traders said prices were expected to remain negative for at least a few more months.
Traders expect cargoes of more than 1 million tonnes in July and said for the market to start to recover cargoes in August would have to be less than 1.2 million tonnes.
So far, more than 700,000 tonnes of naphtha have been provisionally booked for July arrival from the West, and those volumes are set to increase as traders still have time to fix shipments.
Separately, Hanwha Total has bought a cargo for second-half July arrival at Daesan but the price was not immediately known.
GASOLINE UP; CHINESE PRODUCTION SEEN LOWER
Asia's gasoline crack recovered from a 16-1/2 month low to reach a three-session high of $6.67 a barrel.
Singapore's onshore light ends stocks, which comprise mostly gasoline and blending components for the motor fuel, plunged by 2.065 million barrels to a 5-1/2 month low of 13 million barrels in the week to June 8, official data showed.
Stock levels had held above 14 to 15 million barrels since February, and on March 2 set a record high of 15.538 million barrels.
Gasoline supply from China would fall in the June-July interim period, BMI Research said in a note this week.
"While Asian refiners have largely maintained high run rates over the past few months in
anticipation of strong growth in gasoline consumption, as an expanding supply glut erodes margins, we expect to see greater production cutbacks among major exporters, such as China and South Korea," BMI said.
Planned maintenance at teapots will result in about 510,000 barrels of capacity being taken offline over the June-July period, it said.
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