Asia's naphtha crack slumped to $48.65 a tonne on Wednesday, the lowest since January 12, as crackers' run cuts at Asia's top naphtha importer and slow demand weighed heavily. Taiwan's Formosa Petrochemical Corp has cut throughput at its three naphtha crackers to around 80 percent of its total capacity of 2.93 million tonnes per year (tpy), a company spokesman said on Wednesday.
Formosa had to cut runs at the crackers because of a delay in the restart of a unit that uses ethylene as feedstock. But it will increase the operating rate at its 540,000 barrels-per-day (bpd) refinery as it completes maintenance. It will process 480,000 to 500,000 bpd of crude in September, up from the 400,000 bpd in August, said the spokesman.
Formosa's crackers and refinery are located in Mailiao. The weak fundamentals dragged spot prices down, with South Korea's LG Chem having bought naphtha for first-half October delivery at a discount of about $5 a tonne to Japan quotes on a cost-and-freight (C&F) basis, based on traders' estimates. This was the lowest spot price in South Korea in about six weeks, Reuters data showed. "Gasoline weakness is also weighing on naphtha," said a Singapore-based trader.
Naphtha, depending on the grades, can be used as a petrochemical feedstock or as a blending component for gasoline. Gasoline cracks have come under pressure as peak demand wore off. The crack value fell to $11.12 a barrel, lowest since April 10. India's Mangalore Refinery and Petrochemicals Ltd (MRPL) has sold 55,000 tonnes of naphtha for September 23-25 loading from New Mangalore to Unipec at a premium of about $15.50 a tonne to Middle East quotes on a free-on-board (FOB) basis, traders said. This was similar to the average MRPL had fetched for two cargoes sold for August loading.
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