Asia's naphtha crack rose for the fifth straight session on Tuesday to around a 4-1/2 month high of $103.95 a tonne, supported by expectations of strong demand as petrochemical units are mostly operating at high rates, traders said. Spot demand for first-half December cargoes through tenders from South Korea was stronger compared to that for first-half November.
Demand for cargoes under term contracts has also been going strong since August. The Philippines' JG Summit is seeking around 600,000 tonnes of naphtha for 2016 delivery to Batangas while Idemitsu Kosan is looking to buy naphtha for January to June delivery to Chiba and Tokuyama.
"The stronger sentiment is driven by demand. But there this could be short-lived as more western cargoes could start streaming in," said a Singapore-based trader. "Europe has excess cargoes and people basically think Asia can absorb." Abu Dhabi National Oil Co (ADNOC) is in talks to seal a term deal for four naphtha grades loading in 2016 with its Asian buyers. Taiwan's Formosa Petrochemical, Asia's top naphtha importer, is planning to shut in early March 2016 a 180,000 barrels per day (bpd) crude distillation unit, an 80,000 bpd residue desulphuriser unit (RDS) and an 84,000 bpd residual fluid catalytic cracker (RFCC).
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