Asian naphtha crack extends losses

Asia's naphtha crack extended losses for the third straight session on Thursday to reach a two-week low of $43.83 a tonne, dragged down by cracker outages in Singapore. Royal Dutch Shell has declared force majeure on supplies of its base chemicals from its cracker located in Bukom Singapore on Thursday following a compressor problem earlier in the week.
Shell had declared force majeure on supply of its base chemicals from the same cracker twice in 2015, once in October, where the force majeure lasted for about a week, and another in December because of external corrosion. The cracker, which produces over 900,000 tonnes of ethylene, had most recently resumed operations in August this year. Traders said as naphtha is volatile due to the uncertainties in the supply structure, all it takes is one major cracker outage to bring the market down.
The steady stream of demand from North Asia this week and last, coupled with lower incoming European cargoes and efforts of traders having diverted some of the Middle Eastern and Indian naphtha away from Asia to the West could not overturn the weak sentiment.
South Korea's LG Chem managed to pick up naphtha for first-half November delivery at a discount of about $5.50 a tonne to Japan quotes on a cost-and-freight (C&F) basis, making this the widest discount in the country in about 3-1/2 weeks. Asia's top naphtha importer Taiwanese Formosa came forward amid the weaker market to seek open specification grade naphtha for first-half November arrival at Mailiao.
GASOLINE FALLS Asia's gasoline crack slipped to a two-session low of $9.16 a barrel but was still 52 percent higher than the summer driving month of June 28 at $6.01, lifted by refinery maintenance and pockets of demand. Singapore's onshore light distillates stocks, which comprise mostly gasoline and blending components for the fuel, fell 5.4 percent or 688,000 barrels to a 10-1/2 month low of nearly 12 million barrels in the week to September 28, official data showed.
Shell continued to pick up gasoline cargoes from the Singapore cash market, buying another 100,000 barrels on Thursday and bringing its total purchases for the last two sessions to 250,000 barrels.