Asia's naphtha crack hit an eight month high of $104.28 a tonne on Thursday, supported by strong demand as petrochemical makers rely heavily on the fuel in the absence of cheaper alternative liquefied petroleum gas (LPG) feedstock. Taiwan's Formosa Petrochemical Corp, Asia's top naphtha importer, was in talks to buy naphtha for second-half November delivery at Mailiao.
Traders said the spot deal would likely close at premiums around the $2 or slightly over $2 a tonne to Formosa's price formula on a cost-and-freight (C&F) basis. Not only would this be at least 4 times higher than what Formosa had paid on September 21 for cargoes arriving in first-November, but the fresh premiums would also be the highest for the refiner and petrochemicals maker since May 12.
Japan's Showa Denko was also looking to buy naphtha through a tender due to be awarded on Friday, traders added. A day before, Japan's Idemitsu has bought 50,000 tonnes of naphtha for second-half November delivery at premiums of $5 to $7 a tonne to Japan quotes on a cost-and-freight (C&) basis.
Similarly, China's Unipec also picked up a cargo on Wednesday for second-half November delivery at premiums of $10 to $11 a tonne to Japan quotes on a C&F basis. India's Mangalore Refinery and Petrochemicals Ltd (MRPL) sold 35,000 tonnes of naphtha for November 3-5 loading from New Mangalore to Vitol, traders said, adding that the premium would be around the levels of $12.50 a tonne to Middle East quotes on a free-on-board (FOB) basis.
But this could not be confirmed as buyers and sellers do not comment on their deals. MRPL had previously sold two cargoes for October loading at $14 and $12.50 a tonne premium respectively. Counterpart Hindustan Petroleum Corp Ltd (HPCL) had also sold 20,000 tonnes of naphtha this week, but for October 21-23 loading from Visakhapatnam. Traders said the buyer could be Gunvor but this could not be confirmed independently.