Asia's naphtha crack rose to a three-session high of $80.60 a tonne on Thursday, ending three straight days of losses as strong fundamentals led by seasonal factors reversed the tide. Traders said fewer naphtha cargoes typically come to Asia during winter as petrochemical makers in the west turn to naphtha when liquefied petroleum gas (LPG) becomes less widely available as a raw material due to heating demand.
"The prompt month is firm but this is due to seasonal factors. Going forward, the market is expected to be weak," said one Singapore-based trader. Supplies are expected to be plentiful due to new refining capacities and new condensate splitters. India's Bharat Petroleum Corp Ltd (BPCL) is expected to increase its naphtha spot supply once it completes the expansion of its Kochi refinery in 2017.
Expectations of a well-supplied market ahead were the key reason behind 2017 deals being sealed at lower premiums compared with 2016 contracts between Middle Eastern heavy weight suppliers and Asian customers. Indian Oil Corp (IOC) has offered a small naphtha cargo of up to 15,000 tonnes for December 7-9 loading from Paradip through a tender closing on November 21, after a brief absence.
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