Asia's naphtha crack strengthened further to its highest in more than eight months at $130.60 a tonne on Wednesday due to strong petrochemicals demand. An outage at Shell's ethylene cracker in Singapore was expected to have a limited direct impact on the naphtha market, although tighter supply could boost already strong petrochemical margins, traders said. Shell declared force majeure on production of base chemical products at its Bukom plant in Singapore, effective December 1, due to a technical issue.
The problem occurred at the plant's ethylene cracker complex, the company said without providing further details. The plant produces more than 900,000 tonnes a year of ethylene, a building block for plastics. A similar incident in October, when Shell declared force majeure to customers for around one week, had little impact on the naphtha market. Japan's naphtha stocks fell 810,000 barrels to 9.81 million barrels in the week to November 21, the Petroleum Association of Japan (PAJ) said.
Gasoline cracks also continued to improve, holding near their highest in 1-1/2 months at $11.21 a barrel. "Sliding oil prices have resulted in a sizeable short-term demand stimulus, especially for gasoline," analysts at JBC Energy said in a note. They forecast global demand to have risen by 2.5 million barrels per day between June and September. China's gasoline demand grew around 16 percent in October, with growth for the first 10 months of the year at 12 percent.
"For 2016, while auto sales are expected to soften, gasoline demand growth is expected to be supported by consumer spending," analysts at Barclays said in a note. In refinery news, Japan's TonenGeneral Sekiyu KK is in the process of starting up secondary units at its Wakayama refinery after restarting the sole 132,000 barrel-per-day crude distillation unit (CDU) in late November following planned maintenance.
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