Asia's naphtha crack slipped on Wednesday to a nearly two-month low of $57.25 a tonne on ample supplies as refineries ran at high rates to cash in on low crude prices, traders said. The weak fundamentals drew South Korean buyer YNCC forward as it sought to lock in low naphtha prices through a 12-month purchase contract starting July. South Korea's Lotte Chemical, meantime, has bought at least 25,000 tonnes of naphtha at $5 a tonne below Japan quotes on a cost-and-freight (C&F) basis, the first spot purchase tender for second-half June delivery, traders said.
"There is a possibility that prices could go lower. Traders thought that prices could rebound for June cargoes but gasoline failed to support naphtha this time," said a Singapore-based trader. "There has been a lot of increase in the supplies of light distillates and if this continues into Formosa's cracker turnaround season in August, we will trade at lower prices."
Abu Dhabi National Oil Co (ADNOC) insisted on keeping its July 2016 to June 2017 naphtha premiums at its initial offer levels of $12 to $15 a tonne to Middle East quotes on a free-on-board (FOB) basis despite buyers' counter bids on May 3, traders said. Although these levels were lower than its previous contract for July 2015 to June 2016, fundamentals were weaker now than before, they added.
GASOLINE EASES Asia's gasoline crack slipped 9 cents to a six-session low of $8 a barrel on ample supplies. All eyes are on the Ramadan month in June as that is the time when demand hits its peak in Asia.