Asia's naphtha crack for second half March at $80.78 a tonne was at a two-session low on Monday as ample supplies overturned expectations that a glut was easing, traders said. Although South Korea has restarted a cracker following an outage, Japan will stop production at a cracker permanently this month.
LG Chem restarted a 1.04 million tonnes per year (tpy) cracker over the weekend after it was shut on January 26 but Asahi Kasei will cease operations at its 504,000 tpy cracker in Mizushima permanently on February 15. "Japan will shut a cracker while most buyers have completed their purchases for cargoes for first-half March delivery," said a North Asian trader of the weaker sentiment.
"Some traders are holding excess cargoes and if any sellers want to release their cargoes today, the price could be at a discount of $7 a tonne to Japan quotes on a cost-and-freight (C&F) basis." Late last week, Lotte Chemical, Hanwha Total and LG Chem had bought first-half March cargoes at a discount of $6.00 to $6.50 a tonne to Japan quotes on a C&F basis, making that the lowest spot price seen in the country in about a year.
Reliance Industries was looking to sell 55,000 tonnes of naphtha for February 25-29 loading from Sikka but the tender will only be awarded after 1200GMT. Sri Lanka's Ceypetco has offered 140,000 barrels of naphtha for export from Colombo on March 18 through a tender closing on February 9. Shell agrees to sell 51 percent of its stake in Shell Refining Company in Malaysia to Malaysian Hengyuan International Limited (MHIL) for $66.3 million.
GASOLINE CRACK FALLS Asia's gasoline crack fell to a near two-month low of $11.07 a barrel as supplies build on high refinery runs, traders said. Over in India, Indian Oil Corp (IOC) had shut a crude distillation unit (CDU) on Saturday at its 300,000 barrels per day (bpd) Paradip refinery following a fire. But the state-owned oil firm is aiming to restart the CDU in a day or two. IOC was regularly importing gasoline between February 2015 and January 2016 due to heavy refinery maintenance in the country.