Asia's naphtha front-month second-half May price was $13.50 a tonne higher versus second-half June, making this the widest intermonth spread since April 15 2015 on strong demand. Front-month prices are typically higher than the following months when fundamentals are strong. Several buyers came forward to take naphtha for second-half May delivery, including Malaysia-based Titan, Japan's Idemitsu, Showa Denko and South Korea's KPIC and GS Caltex.
KPIC paid some $15 a tonne premium to Japan quotes on a cost-and-freight (C&F) basis for the fuel while GS Caltex paid a premium of about $13.50 a tonne premium, traders said. Idemitsu paid around $14 a tonne premium to Japan quotes on a C&F basis but pegged to a 45-day price formula instead of the usual 30 days, traders said.
Strong demand has repeatedly kept premiums at firm levels and kept supplies tight for both open-specification naphtha as well as heavy full-range grade. Strong fundamentals were seen across markets, with Indian refiners fetching higher premiums. Bharat Petroleum Corp Ltd (BPCL) for instance sold up to 40,000 tonnes of naphtha for April 15-16 loading from Kochi to Petro-Diamond at premiums of about $24 a tonne to its own price formula on a free-on-board (FOB) basis.
This was higher compared to the $19 to $20 a tonne premium BPCL had fetched for a cargo sold for March 18-19 loading from Kochi. Mangalore Refinery & Petrochemicals Ltd (MRPL) on the other hand sold 35,000 tonnes of naphtha for April 22-24 loading from New Mangalore to Vitol at premiums of $27 to $28 a tonne to Middle East quotes on a FOB basis. This was higher compared to the $20.50 a tonne MRPL received for a cargo sold for April 12-14 loading.
Kuwait also sold this week 25,000 tonnes of full-range naphtha and 24,000 tonnes of light naphtha for second-half May loading at premiums of about $22 a tonne to Middle East quotes on a FOB basis. Asia's gasoline crack slipped 1 cent to $8.16 a barrel but fundamentals remained weak due to high supply especially in Europe.
Singapore's onshore light distillates stocks, which comprise mostly gasoline and blending components for the fuel, fell 7.7 percent or nearly 2 million barrels to reach a five-week low of 14.436 million barrels in the week to April 4, official data showed. But a week ago, inventories were at a record high.
In Europe, more than 400,000 tonnes of gasoline were being stored on tankers off the coast of northwest Europe, according to traders and shipping data, as land storage hit a record high last week. Indonesia's Balikpapan refinery has reduced runs after an oil spill. JXTG Nippon Oil & Energy Corp has signed a memorandum of understanding with state-owned Vietnam National Petroleum Group (Petrolimex) to work on a feasibility study on a cooperative project using its 120,000 barrel-per-day Marifu Refinery in western Japan.