Asia's naphtha crack ended the week at a four-session high of $101.98 a tonne as buyers continued their hunt for cargoes, causing supplies to tighten, traders said. South Korea's Lotte Chemical and its Malaysian unit Titan were out seeking naphtha. Lotte paid a premium of $5.00 to $5.25 a tonne above Japan quotes on a cost-and-freight basis for cargoes scheduled for first-half December delivery to Yeosu and Daesan, traders said.
This was higher compared to $4.25 to $4.75 a tonne premium Lotte had paid on October 3 for cargoes scheduled for second-half November delivery. Lotte's purchase came a day after LG Chem forked out about $4.75 a tonne premium for naphtha scheduled for first-half December delivery, which was also higher versus the $3.50 to $4 a tonne level it had paid on October 11. Taiwan's Formosa, China's Unipec and CNOOC were also out this week seeking cargoes.
Despite higher Western cargoes coming to Asia next month, demand would outstrip the volumes. "The West-East trade window is still open but freight rates are high. Additionally, cargoes coming in are mainly of heavier grades," said a Singapore-based trader. Naphtha cracker operators typically buy a lighter, paraffinic grade and not the heavy grades.
India's domestic demand for naphtha in September at 1.16 million tonnes was not only 6.4 percent higher than August but was also the highest monthly demand for this year. Asia's gasoline crack on the other hand fell to a six-session low of $9.93 a barrel to mirror higher stocks in the West.