Asia's naphtha crack recovered to a nine-session high of $91.63 a tonne on Friday, supported by strong gasoline demand, traders said. They added that a fire at top Japanese refiner JX Nippon Oil & Energy Corp's Kashima refinery could have also lifted sentiment, although exact production details on the refining units and a condensate splitter were not known.
The main oil product yield from a condensate splitter is naphtha. Naphtha in general can be reformed into gasoline or used as a gasoline blendstock apart from being a feedstock for petrochemicals, depending on the grades. Gasoline demand has been unusually strong because of the Muslim fasting month coinciding with the summer driving season and refinery shutdowns in India. Indian Oil Corp (IOC) and Hindustan Petroleum Corp Ltd (HPCL) have been on a spree, buying a total of over 390,000 tonnes of gasoline for March to June delivery.
HPCL still has outstanding tenders to buy 90,000 tonnes of gasoline for June delivery. Within the petrochemical sector, demand for naphtha was seen lower. Taiwan's Formosa Petrochemical Corp, Asia's top naphtha importer, has bought 50,000 tonnes of open-specification grade for first-half July delivery to Mailiao at a discount of about $2.50 a tonne to Japan quotes on a cost-and-freight (C&F) basis.
Formosa used to buy an average of 300,000 tonnes of open-spec grade a month. However, its June spot volumes were reduced to about 150,000 tonnes as it prepares to shut one of three crackers for maintenance starting in mid-June. Formosa has also managed to buy alternative liquefied petroleum gas (LPG) to replace a portion of its naphtha. South Korea's Lotte Chemical was seeking naphtha for first-half July but the results were not clear.