South Korea's YNCC is seeking 100,000 tonnes of naphtha in a term contract beginning April and up to March next year, traders said on Thursday, at a time when spot prices are weakening on ample supply. YNCC is seeking the cargoes through a tender that closes on January 18, with offers to stay valid until January 20. The petrochemical maker has two contracts expiring in June and September, respectively, which were concluded in June and August of last year at discounts ranging from 75 cents to $3 a tonne to Japan quotes on a cost-and-freight (C&F) basis.
YNCC's new tender comes two days after Taiwan's CPC issued a contract for 700,000 tonnes naphtha for delivery from March to December 2016. Asian naphtha took a hit this week after sellers offloaded excess cargoes for second-half February delivery at discounts in South Korea, the first time since early November.
High cargo volumes from Europe and the United States have hurt sellers. Demand for this month and the next also fell as liquefied petroleum gas (LPG) replaced naphtha as feedstock at some Asian crackers, traders said. Some of the Asian crackers are able to replace between 5 and 15 percent of their naphtha feedstock with LPG, but LPG prices must be at least $50 lower than naphtha's for it to be economical. Asia's naphtha crack, the premium to refine a barrel of Brent crude into the petrochemical feedstock, fell to a near two-month low of $109.58 a tonne on Wednesday.