Asian naphtha prices edged down from record highs on Monday, alongside crack spreads as news of Asia's top ethylene maker unexpectedly shutting a cracker weighed on sentiment. Japan open-spec prices for first-half August eased by $1.00 to $1,229.00 a tonne, while naphtha's premium to Brent extended its losses, this time by $4.75 to $163.85 a tonne.
The half-month backwardation between first-half and second-half August also inched down by $1.00 to $7.00 a tonne in reflection of the slightly weaker market. Formosa Petrochemical Corp shut its 1.03 million tonnes per year (tpy) No 2 cracker on Sunday after a compressor glitch. The company, however, has not confirmed how long the cracker would be taken offline, but traders pegged it at around a week.
"The company has been experiencing some minor hiccups with its No 2 cracker but the market reacts to it," said a Northeast Asian trader. Generally, prompt naphtha supply is still tight, and adding to this is Sri Lanka's Ceypetco seeking 10,000 tonnes of naphtha for use in its power generation for the first-time. No cash deals were done as buyers held back on high prices.
In discussion for gasoline, the reforming margin, or gasoline's premium to naphtha, edged up by 36 cents to $12.54 a barrel, mainly because of Shell shutting its refining units in Malaysia and Singapore plants for maintenance. "There's no lack of low-octane gasoline in the market," said a Singapore-based trader.