Asia's naphtha crack fell 4 percent from a nearly four-month high to $58.48 a tonne on Friday though that was still more than double the value from a month ago due to a drop off in supplies coming to the region. Asia is set to receive about 650,000 tonnes of naphtha in October from the West, including Europe and the Mediterranean, estimates from traders and shipping reports showed.
While higher than the 600,000 tonnes scheduled to arrive in September - which would be the lowest in about four years - the October arrivals are well below the monthly average of nearly 1.4 million tonnes for January to August. Demand on the other hand was healthy, with a Japanese petrochemical maker in the market looking to buy naphtha.
This week South Korea's YNCC, Lotte Chemical and LG Chem have bought total of over 100,000 tonnes of naphtha for first-half November delivery at discounts of $3 to $4.50 a tonne to Japan quotes on a cost-and-freight (C&F) basis. "Demand for naphtha in the fourth quarter will be better because the demand lost from cracker maintenance will be smaller compared to the third quarter. But I think there could be a cap as to how much naphtha can improve," said a trader in Singapore.
Japan's JX Nippon Oil and Taiwan's Formosa will complete maintenance at their crackers this month which have a combined ethylene capacity of nearly 1.5 million tonnes per year. There is still a comparatively large amount of liquefied petroleum gas (LPG) in the market, traders said. LPG can replace 5 to 20 percent of naphtha in some of Asian crackers.
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