Asia's naphtha crack jumped 14.6 percent to reach a 1-1/2 week high of $83.98 a tonne on Thursday but traders said they expected the market's supply outlook would limit gains. Cargoes arriving this month from the West, including Europe and the Mediterranean, remained high at over 1.6 million tonnes.
This was down from the 2 million tonnes for January, but February volumes are still expected to be high because February is the shortest month in the calendar year. Also, February cargoes were higher than 2017's monthly average at about 1.2 million tonnes. The supply outlook has put pressure on spot prices in the last few weeks and they have fallen this week.
South Korea's LG Chem bought additional naphtha for first-half March arrival, which traders said was likely for Yeosu, at premiums of about $2 a tonne to Japan quotes on a cost-and-freight (C&F) basis. This was lower than the $3 to $4 a tonne premium LG Chem had paid on January 26 for naphtha scheduled for first-half March delivery. But the arrival ports were not known as LG Chem operates a cracker each at Yeosu and Daesan.
Cargoes delivered to Daesan are usually costlier than those shipped to Yeosu. The purchase came a day after Hanwha Total had paid around $3.25 a tonne premium to Japan quotes on a C&F basis for cargoes scheduled for second-half March delivery.
This was lower versus the $4 a tonne premium Hanwha had paid on January 25, Asia's gasoline hit a 1-1/2 month high of $9.38 a barrel, supported by drawdown on stocks. Gasoline stocks in the US fell by 2 million barrels last week compared with analysts' expectations in a Reuters poll for a 1.8 million barrels gain.
Singapore's onshore light distillates stocks also fell, although only by 15,000 barrels or less than 0.5 percent, to about two-month low of 12.8 million barrels in the week to January 31, official data showed. State oil company Sinopec Group said China's gasoline consumption will hit a peak between 2025 and 2030.