Asia's naphtha crack surged 15.7 percent to hit a one-year high of $111.30 a tonne on Thursday as supplies tightened on persistent demand and reduced volumes arriving from the West. A fire at Abu Dhabi's state-owned national oil company ADNOC's refinery also lifted sentiment although the company said production at the Ruwais refinery was unaffected.
"Naphtha supplies may not be affected but ADNOC may be tight on gasoline following the fire," said a Singapore-based trader not related to ADNOC. The blaze occurred in the same week that Russia's Tuapse oil refinery, owned by Rosneft, shut its sole primary processing CDU-12 unit after a pump was damaged by a fire.
Even before the refinery outages in United Arab Emirates and Russia, Asia was already expected to receive some 40 percent fewer cargoes in February vs January from the West including Europe and the Mediterranean. Asia is expected to get around 900,000 tonnes of naphtha from the West versus 1.5 million tonnes arriving in January.
With supplies running lower, buyers ended up paying more for cargoes. Taiwan's Formosa for instance paid a discount of $1 to a premium of $1 a tonne to Japan quotes on a cost-and-freight (C&F) basis for 150,000 tonnes of open-specification naphtha for second-half February delivery to Mailiao. On Dec. 29 it paid a discount of $3 to $4 a tonne for cargoes scheduled for first-half February arrival at Mailiao.
South Korea's LG Chem on the other hand paid a premium of about $3 a tonne to Japan quotes on a C&F basis for naphtha scheduled for first-half March delivery. This was double what it had paid on Jan. 6 for cargoes delivering in second-half February.
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