Asia's naphtha crack dived for the second straight day on Thursday to hit $66.50 a tonne, the lowest since December 21 last year as gasoline weakness in the West and falling alternative liquefied petroleum gas (LPG) prices weighed on the market, traders said.
Ethylene makers in Asia have not been able to replace naphtha with LPG, a commodity used for heating, in the last few months due to high prices caused by winter demand. But butane prices have fallen sharply recently and it could come back into the cracking pool in May or even earlier, traders said. Although premiums for Indian naphtha spot cargoes held above $10, traders said it may not be sustainable given the overall weakness of the light ends market.
"Light ends as a whole is down. I don't think the premiums for Indian cargoes are sustainable and they will see a downward revision," said a Singapore-based source. India's Reliance Industries has sold a 10,000-tonne naphtha cargo and another 45,000-tonne cargo to be co-loaded on March 26-28 from Sikka to Petro-Diamond at premiums close to $12 a tonne to Middle East quotes on a free-on-board (FOB) basis.
Bharat Petroleum Corp Ltd (BPCL) sold 55,000 tonnes for March 7-9 loading from Kochi to Vitol at premiums of about $11 to Middle East quotes on a FOB basis. Mangalore Refinery and Petrochemicals Ltd (MRPL) sold 35,000 tonnes of naphtha to PetroChina at premiums of about $12.50 a tonne to Middle East quotes on a FOB basis.
Indian Oil has offered up to 17,000 tonnes of 91-octane grade gasoline with 50 ppm sulphur for March 17-19 loading from Paradip and up to 14,000 tonnes of a similar grade for March 22-23 loading, also from Paradip through a tender closing on March 3.
Singapore's onshore light ends stocks slipped nearly 4 percent or 519,000 barrels to reach an eight-week low of 12.682 million barrels in the week to March 1, official data showed. This was in line with US gasoline stocks having fallen by 546,000 barrels last week, data from the US Energy Information Administration (EIA) showed. But the fall in US stocks was smaller when compared with analysts' expectations in a Reuters poll for a drop of 1.8 million barrels.
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