Asian naphtha prices fell on Wednesday, while naphtha's premium to ICE Brent crude steadied after gains the previous session, as the market focused on the startup of an expanded South Korean cracker. South Korea's LG Chem Ltd started producing on-specification material at its expanded 760,000 tonnes per year (tpy) naphtha cracker earlier on Wednesday.
A day after it resumed feeding naphtha, a company source said. The key open-spec naphtha contract for the second half of May was notionally assessed at $673.50 a tonne, on a cost-and-freight (C&F) basis, down $5 from late Tuesday.
The backwardation remained unchanged between the second halves of May and June at $8.50 a tonne. The ICE Brent/naphtha crack - the premium paid for naphtha compared with Brent crude prices - stood at $165.50 for the second half of May, little changed from Tuesday.
"The arbitrage flow is robust with cargoes arriving from the Mediterranean and other regions, but not enough to cool the market," said a trader. "With naphtha prices this high, the situation is severe for regional end users."
May ICE Brent crude was down 7 cents at $67.74 a barrel, after settling down 93 cents on Tuesday. April Singapore naphtha swaps were valued at $72.30 a barrel, down from $72.80 on Tuesday.
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