Asia's naphtha crack reached a two-month high of $38.73 a tonne on Wednesday, while gasoline margins hit a 2-1/2 month high of $7.08 a barrel, supported by supply disruptions in Asia and strong demand in the West. Vietnam's Nghi Son oil refinery is being restarted, more than a week after the plant's fluid catalytic cracking unit went down, disrupting operations at the 200,000-barrels-per-day facility. This came at a time when there are other production cuts taking place in pockets of Asia due to maintenance or reductions caused by unworkable margins.
Demand for European gasoline from the United States was also strong following a massive fire at Philadelphia Energy Solutions last month. So far, a total of about 1.14 million tonnes have been booked for first half July loading from Europe to the United States, an almost 40% increase from the previous three months, according to shipping data. Analysts estimated that gasoline stockpiles in the United States likely fell by 1.3 million barrels last week, an extended Reuters poll showed on Tuesday.
Demand for naphtha continued, with South Korea's YNCC buying a cargo of open-specification naphtha grade for second-half August delivery at a discount of about 50 cents to Japan quotes on a cost-and-freight (C&F) basis. YNCC had on July 4 paid a discount of about $2 for cargoes delivering in the same period of second-half August. Hanwha Total on the other hand paid a high single-digit premium for heavy full-range grade scheduled for second-half August delivery. It had on July 4 paid a premium of about $10 a tonne, also for heavy full-range grade scheduled for second-half August delivery.
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