Asia Naphtha/Gasoline-Naphtha strengthens on seasonal factors

SINGAPORE: Asia's naphtha crack rose to a three-session high of $80.60 a tonne on Thursday, ending three straight days of losses as strong fundamentals led by seasonal factors reversed the tide.

Traders said fewer naphtha cargoes typically come to Asia during winter as petrochemical makers in the west turn to naphtha when liquefied petroleum gas (LPG) becomes less widely available as a raw material due to heating demand.

"The prompt month is firm but this is due to seasonal factors. Going forward, the market is expected to be weak," said one Singapore-based trader.

Supplies are expected to be plentiful due to new refining capacities and new condensate splitters.

India's Bharat Petroleum Corp Ltd (BPCL) is expected to increase its naphtha spot supply once it completes the expansion of its Kochi refinery in 2017.

Expectations of a well-supplied market ahead were the key reason behind 2017 deals being sealed at lower premiums compared with 2016 contracts between Middle Eastern heavy weight suppliers and Asian customers.

TENDERS: Indian Oil Corp (IOC) has offered a small naphtha cargo of up to 15,000 tonnes for Dec. 7-9 loading from Paradip through a tender closing on Nov. 21, after a brief absence.

IOC had said previously it was aiming to halt exports of naphtha, which can be reformed into gasoline depending on the grade, from Paradip once its gasoline-making unit at the site was operating smoothly.

The naphtha offer led traders to speculate the gasoline unit may not be running smoothly although this could not be immediately confirmed.

GASOLINE FIRMS

Asia's gasoline crack was at a two-session high of $8.58 a barrel on strong demand from Indonesia, Asia's top gasoline importer.

Singapore's onshore light distillates stocks, which comprise mostly gasoline and blending components for petrol, edged up slightly to a three-week high of 11.33 million barrels in the week to Nov. 16.

But the current levels were 8.7 percent lower than the same period last year, official data showed.

Indonesia's demand for the fuel this month remained strong, with close to 246,000 tonnes of petrol being shipped there from Singapore, the data showed.

In the previous week ended Nov. 9, Singapore shipped nearly 360,000 tonnes of the fuel to Indonesia.