Record High Western Naphtha Heads for Asia in May
A record high of more than 700,000t of European naphtha has been booked to arrive in Asia in May, to meet healthy demand from North Asia but putting a damper on recovering crack levels, traders said on Friday.
This is the first time Asia has been given priority to receive such large volumes of naphtha from Europe, which normally also goes to the United States, though some of the barrels are provisional bookings and subject to change.
"Some of these cargoes could eventually land in the US, as traders have the options of moving the parcels either way. Nonetheless, this is the highest number of naphtha arbitrage bookings I have ever seen for a single month," said a Northeast Asian trader.
"The highest I've seen in the past was around 500,000t," he added.
Robust demand in Northeast Asia on the back of shrinking supplies caused by heavy refinery maintenance in Japan, and weak demand for naphtha in Europe, which uses more LPG for its petrochemical sector, have helped to widely open the west-east arbitrage window, traders said.
The large volumes have driven cracks – premiums or losses obtained from refining Brent crude into the petrochemical feedstock – to their lowest in 10 days at $72.55/t premium on 2 April.
Before this, cracks had been recovering to their highest in four weeks at $91.58/t premium on 31 March on continually firm Chinese demand. "The volumes have impacted sentiment, but if you do the math, Asia will still be short, as it actually needs around 800,000t-900,000t of arbitrage in May," the same trader said.
Demand is also edging up in Japan, as Nippon Oil and Sumitomo Petrochemical have raised crackers' runs. At least three others – Maruzen Petrochemical, Mitsui Chemicals and Showa Denko – will boost their crackers' output this month.
Most crackers in South Korea, which has a nameplate capacity of about 7.3 million tons of ethylene a year, are running at almost full-tilt.
In Taiwan, Formosa Petrochemical, Asia's top ethylene maker, is operating its 2.93 million tons a year (tpy) cracking complex at 90%-95% capacity.
Given these, Taiwan, South Korea and Japan have taken a total of at least 550,000t of naphtha for first-half May arrival. They will need to replenish second-half May stocks, traders said.
"Honam is already in the market seeking 50,000t-75,000t of naphtha for May arrival," said a trader in South Korea.
The South Korean petrochemical firm, which runs two crackers with a total nameplate capacity of about 1.72 million tons a year had bought around 100,000t of naphtha for first-half May alone.
By Seng Li Peng, Reuters.
Quoted from: Chemicals Technology
This is the first time Asia has been given priority to receive such large volumes of naphtha from Europe, which normally also goes to the United States, though some of the barrels are provisional bookings and subject to change.
"Some of these cargoes could eventually land in the US, as traders have the options of moving the parcels either way. Nonetheless, this is the highest number of naphtha arbitrage bookings I have ever seen for a single month," said a Northeast Asian trader.
"The highest I've seen in the past was around 500,000t," he added.
Robust demand in Northeast Asia on the back of shrinking supplies caused by heavy refinery maintenance in Japan, and weak demand for naphtha in Europe, which uses more LPG for its petrochemical sector, have helped to widely open the west-east arbitrage window, traders said.
The large volumes have driven cracks – premiums or losses obtained from refining Brent crude into the petrochemical feedstock – to their lowest in 10 days at $72.55/t premium on 2 April.
Before this, cracks had been recovering to their highest in four weeks at $91.58/t premium on 31 March on continually firm Chinese demand. "The volumes have impacted sentiment, but if you do the math, Asia will still be short, as it actually needs around 800,000t-900,000t of arbitrage in May," the same trader said.
Demand is also edging up in Japan, as Nippon Oil and Sumitomo Petrochemical have raised crackers' runs. At least three others – Maruzen Petrochemical, Mitsui Chemicals and Showa Denko – will boost their crackers' output this month.
Most crackers in South Korea, which has a nameplate capacity of about 7.3 million tons of ethylene a year, are running at almost full-tilt.
In Taiwan, Formosa Petrochemical, Asia's top ethylene maker, is operating its 2.93 million tons a year (tpy) cracking complex at 90%-95% capacity.
Given these, Taiwan, South Korea and Japan have taken a total of at least 550,000t of naphtha for first-half May arrival. They will need to replenish second-half May stocks, traders said.
"Honam is already in the market seeking 50,000t-75,000t of naphtha for May arrival," said a trader in South Korea.
The South Korean petrochemical firm, which runs two crackers with a total nameplate capacity of about 1.72 million tons a year had bought around 100,000t of naphtha for first-half May alone.
By Seng Li Peng, Reuters.
Quoted from: Chemicals Technology
