Asia's naphtha cracks extended gains to reach a nearly four-month high of $60.93 a tonne while the intermonth spreads flipped to a premium or backwardation for the first time since April 27 on demand and expectations of lower supplies. When fundamentals are strong, the front-month price is usually higher than the following month. The current strength in the market was driven mainly by supply, traders said.
Qatargas has delayed the start-up of its new 146,000 barrels per day (bpd) Ras Laffan 2 condensate splitter, a unit which makes naphtha. Qatar, which usually prefers to tie up most of its naphtha through long-term contracts, had offered through tenders a total of 200,000 tonnes of spot naphtha for October loading. These spot tenders were to be awarded on September 21, but no results have been made clear.
In South Korea, LG Chem bought a naphtha cargo for first-half November delivery at a discount of $3 a tonne to Japan quotes on a cost-and-freight (C&F) basis. Not only was the discount level four times narrower versus what the petrochemical maker had paid on August 25, it also marked the narrowest discount seen in South Korea since June 16.
GASOLINE UP Asia's gasoline was also near a four-month high of $9.14 a barrel in reflection of comparatively lower supplies and strong sentiment in the West due to demand and outages. China's August gasoline exports at nearly 672,400 came off from a record high of 1.1 million tonnes in June and 966,528 tonnes in July.