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Around 900,000 to 1 million tonnes of European/Mediterranean naphtha are expected to arrive in Asia in May, similar to March volumes which were at five-month low, traders said on Friday. The lower-than-average European volumes, as opposed to a record 1.7 million tonnes for January arrival in Asia, are coming at a time when Asia needs more supplies from the west due to heavy refinery maintenance, traders added.
"Asia needs about 1.4-1.5 million tonnes from the west for May arrival," said a Singapore-based trader. As it usually takes about 35 to 40 days for European cargoes to reach Asia, depending on which ports the cargoes are sailing from, traders still have time to fix cargoes for Asia arrival in late May. But Europe may not have that much spare capacity as it is also in its heavy refinery turnaround mode. Additionally, Europe likely prefers to divert whatever spare naphtha it has now into gasoline production or gasoline blending to meet motor fuel demand in the US, traders said.
But the current strong market could take a hit after May. "The market is supported now but many of the refineries would have completed their maintenance in June. On top of this, there are new splitters coming up in South Korea and this will result in new naphtha supplies," said another trader. SK Energy is building a new 100,000 barrels per day condensate splitter due for completion by May while Samsung Total is expected to bring online a 145,000 bpd condensate splitter around July.

Copyright Reuters, 2014

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