The Asian naphtha crack was little changed at $134.73 a tonne on Friday, with ample supplies seen. India's Reliance Industries sold two naphtha cargoes totalling 90,000 tonnes, instead of just the one that traders expected at 35,000 or 55,000 tonnes. Traders said the estimated premium level was under $15 a tonne to Middle East quotes on a free-on-board (FOB) basis for each of the cargoes scheduled for mid- to second-half September lifting from Sikka.
"This means more cargoes in an already well supplied market," a Singapore-based source said. With the 90,000 tonnes sold this week, Reliance's September exports so far amounted to 125,000 tonnes, up from 75,000 tonnes for August, Reuters data showed. Naphtha was mostly on a bull run so far this year, but the tide changed this month after the gasoline peak demand season ended.
This caused Europe, the Mediterranean and the United States to release about 2 million tonnes of naphtha to Asia to arrive in September as the fuel can be used as gasoline blend stock other than being cracked into petrochemicals. The continuous use of alternative liquefied petroleum gas (LPG) by crackers to replace a portion of naphtha has also hurt the market. "LPG is one of the key reasons behind the horrible naphtha market," another source said.
India's ONGC offered 35,000 tonnes of naphtha for September 24-25 loading from Hazira in a tender closing on August 26. Bids are to stay valid until August 27. South Korea's KPIC has bought around 300,000 tonnes of naphtha for delivery October 2014 to December 2015. Premiums were unclear.