The Asian naphtha market was seeing reduced demand from steam crackers for naphtha with minimum paraffin content of 65% and 70%, owing to scheduled steam cracker turnarounds in Northeast Asia, market sources said. At least one steam cracker in Japan and two plants in South Korea — with a combined ethylene production capacity of 2.07 million mt/year — are idling their units for maintenance in April. While demand for paraffinic naphtha is low, supply for April delivery from the the West is also expected to dip. Some 1.5 million mt of arbitrage volume is expected from the US and Europe, compared with around 1.8 million mt expected for March arrival. “Turnarounds make demand low, but I don’t see it [market] as weak,” said an Asian trader. Despite weaker demand from the petrochemical sector, demand for naphtha for gasoline blending is looking up, helped by a strengthening gasoline market. “The gasoline market is currently very supported … demand for blending, as a result, has rebounded in the past few weeks,” one Singapore-based gasoline trader said. Reflecting stronger blending demand, the Singapore reforming margins have firmed. The April Singapore reforming spread — the spread between FOB Singapore 92 RON gasoline and FOB Singapore naphtha derivative — surged to a near seven-month high of $12.36/b on March 8, as gasoline rose on the back of a tightening in supply. The reforming spread was last higher on August 15, 2018, at $12.45/b, S&P Global data showed. In the spot market Tuesday, some buying interest emerged from South Korea for H2 April-delivery cargo. South Korea’s Yeochun Naphtha Cracking Center issued a tender Tuesday seeking open-spec naphtha with minimum 70% paraffin content for H2-April delivery into Yeosu, market sources said. YNCC last bought an unknown volume of similar grade naphtha for H1 April delivery to Yeosu at a premium of around $4-$5/mt to the MOPJ naphtha assessments, on a CFR basis, pricing 30 days prior to delivery.
Naphtha Price in India
NAPHTHA CARGO CIF NWE MOC deals: TRADES: No trades reported. NAPHTHA CARGO CIF NWE MOC: OUTSTANDING INTEREST:BIDS: 1) GLENCOREUK Bid, Naphtha NWE Crg 12.5 KT +/- 10%, pricing $524/mt, laycan Mar 23 – Mar 27, TQC Indic 4; 2) GLENCOREUK Bid, Naphtha NWE Crg min qty 24 KT, pricing $525/mt, laycan Mar 22 – Mar 26, TQC Indic 1: optol +3; 3) STASCO Bid, Naphtha NWE Crg min qty 28 KT, pricing $526/mt, laycan Mar 21 – Mar 25, TQC indic 1, optol +2; 4) GLENCOREUK Bid, Naphtha NWE Crg min qty 28 KT, pricing $525/mt, laycan Mar 22 – Mar 26, TQC Indic 2: optol +3; 5) STASCO Bid, Naphtha NWE Crg min qty 32 KT, pricing $523/mt, laycan Mar 21 – Mar 25, TQC indic 2, optol at +2; 6) GLENCOREUK Bid, Naphtha NWE Crg min qty 32 KT, pricing $525/mt, laycan Mar 22 – Mar 26, TQC Indic 3: optol +3; OFFERS: 1) BP Offer, Naphtha NWE Crg min qty 28 KT, pricing $527/mt, laycan Mar 28 – Apr 01, TQC indic 1 optol +3; 2) PTRIN Offer, Naphtha NWE Crg min qty 28 KT, pricing $528/mt, laycan Mar 28 – Apr 01, TQC indic 1: 0-4kt optol @ +3; 3) TRAFI Offer, Naphtha NWE Crg min qty 28 KT, pricing $528/mt, laycan Mar 17 – Mar 21, TQC indic 1, optol +3.00; 4) VITOL Offer, Naphtha NWE Crg min qty 32 KT, pricing $529/mt, laycan Mar 28 – Apr 01, TQC optol +4.
– Slightly bearish sentiments, recent weakness in SM
– Downstream markets flat on week amid poor demand
The Asian styrene monomer price held steady at $1,061.50/mt CFR China and at $1,021.50/mt FOB Korea Thursday , tracking stable ethylene prices. In China, prices were moving in mixed directions. The prompt marker fell Yuan 20/mt to Yuan 8,250/mt ex-tank while the March marker was stable at Yuan 8,360/mt ex-tank Thursday . At 4:30 pm Singapore time (0830 GMT), ICE April Brent crude futures were down 24 cents/b (0.361%) on the day at $66.31/b. Sources noted that while the market expected softer styrene prices since Chinese downstream end-users have yet to return, the persistent decline in prices has affected the confidence level among market participants resulting in slightly bearish sentiments lately. According to market sources, East China inventory stood at 335,500 mt, up 29,000 mt week-on-week, with arrivals of 55,500 mt outstripping consumption of 26,500 mt. In the related downstream markets, acrylonitrile-butadiene-styrene prices were unchanged week on week at $1,500/mt CFR China and $1,530/mt CFR Southeast Asia amid muted demand although higher offers were heard in the week. In the polystyrene market, general purpose polystyrene prices remained flat from the previous week at $1,250/mt CFR China and $1,260/mt CFR Southeast Asia while high-impact polystyrene was flat at $1,340/mt CFR China and $1,335/mt CFR Southeast Asia Thursday , amid weak demand following the Lunar New Year holidays.
Asian SM was assessed flat on the day at $1,061.50/mt CFR China and $1,021.50/mt FOB Korea Thursday . The CFR China and FOB Korea SM markers currently take the average of the H2 March and H1 April laycans. There were no transparent bids and offers during the Market on Close assessment process on Thursday . H2 March was assessed at $1,059/mt, tracking firmer sentiments in the east China domestic March marker in the afternoon. Maintaining the pegged Mar/Apr spread of minus $5/mt, the April laycans were assessed at $1,064/mt CFR China. The East China domestic March marker was assessed at Yuan 8,360/mt ex-tank Thursday , unchanged day on day. On an import parity basis, this is approximately $1,046/mt. FOB Korea marker was assessed at $1,021.50/mt Thursday , based on the pegged $40/mt spread to CFR China, while CFR Taiwan marker was assessed at $1,049.50/mt Thursday , based on the pegged $12/mt spread to CFR China.
Asian styrene monomer fell $13/mt from last Tuesday to $1,074/mt CFR China and $1,024/mt FOB Korea Tuesday on expectations that buying interest from downstream markets would not pick up strongly this week. Discussion remained muted as participants began returning to the market after week-long Lunar New Year holidays. In the east China domestic market, the prompt marker was assessed down Yuan 140/mt from last Tuesday at Yuan 8,430/mt ex-tank Tuesday, equating to $1,056/mt on an import parity basis. Operating rates of producers and buyers in downstream markets were expected to return to normal gradually. “Styrene price movements would depend on the rate at which operations return to pre-holiday rates. Further, new orders are expected to be limited this week,” a market participant in China said. High inventory levels of styrene in east China could also keep prices on a downtrend. The styrene inventory in east China stood at 306,500 mt Tuesday, up 37,000 mt from January 30, market sources said. Feedstock benzene rose $4/mt from last Tuesday to $609/mt CFR China Tuesday, while ethylene rose $15/mt over the same period to $1,100/mt CFR Northeast Asia. SM production margins remain healthy at $106.80/mt, although $20.70/mt lower than a month earlier, according to S&P Global CSG data.
Asian SM was assessed down $13/mt from last Tuesday at $1,074/mt CFR China and $1,024/mt FOB Korea Tuesday. The two markers currently take the average of the H1 and H2 March laycans. There were no transparent bids or offers during the CSG Market on Close assessment process. H1 and H2 March were each assessed at $1,074/mt CFR China. The East China domestic prompt marker was assessed at Yuan 8,430/mt ex-tank, down Yuan 140/mt from last Tuesday, and equating to $1,056/mt on an import parity basis. The FOB Korea marker was assessed at $1,024/mt, based on the pegged $50/mt spread to CFR China, and the CFR Taiwan marker at $1,062/mt, based on the pegged $12/mt spread to CFR China.
S&P Global CSG assessed benzene for delivery 5-30 days forward at $591/mt Tuesday, up $2/mt from Tuesday’s assessment. Market participants described the benzene market as quiet Tuesday, with one source saying that he had seen “very few” prices indicated on the market. Another source added that “the period after Chinese New Year was supposed to give some direction to the market, but I haven’t seen anything for now.” In addition to muted market activity, a third source said that no benzene trades were conducted Tuesday, although buying activity on the downstream styrene market picked up. Furthermore, the benzene market saw outstanding bids and no offers, with a fourth source commenting that, in his opinion, this was the result of “a thin market and expectations that prices have to recover.” Meanwhile, sources said that the benzene market remained long. The benzene-naphtha spread was seen at $116/mt Tuesday, down from $127.50/mt Tuesday, indicating the persistence of significant supplies of benzene in the market. Upstream, on the crude oil market, the 1630 GMT ICE Brent crude oil futures assessment fell to $61.28/b Tuesday from $61.74/b Tuesday.
S&P Global CSG assessed benzene for delivery 5-30 days forward at $591/mt CIF ARA Tuesday, up $2/mt from Tuesday’s assessment. February was assessed at $586/mt, up $1/mt day-on-day, above the most competitive bid of $585/mt. March was assessed up $1/mt from Tuesday’s assessment at $596/mt, above the most competitive bid of $595/mt and based on a stable February-March contango of $10/mt. April was assessed up $1/mt on the day at $606/mt, above the most competitive bid of $600/mt and based on a stable March-April contango of $10/mt. May and June were assessed flat to April. FOB was assessed at $591/mt, flat to CIF.
Spot trading activity for Phthalic Anhydride gained traction this week as more buyers in Southeast Asia stepped up their purchase of feedstock ahead of the Lunar New Year. “Spot supply for Phthalic Anhydride in SEA is tight and there is strong demand from buyers who want to buy more to stock up their inventories,” a South Korean producer, who sold eight parcels of PA cargoes totalling over 1,200 mt to SEA buyers this week, said. On the other hand, buying interest for Dioctyl Phthalate was reported stronger as Chinese buyers want to stock up before the commencement of the Lunar New Year festivities this week. “I do not think the DOP market in China has really gotten stronger this week, but rather the strengthening of the Chinese Yuan against the greenback this week has made imported material more palatable to them,” a Taiwanese producer, who sold a cargo to Chinese buyer at $1,050/mt CFR China this week, said. The same Taiwanese producer offered at cargo at $1,050/mt CFR China last week, but there were no takers. On the SEA marker, sellers however, had to lower their offers for DOP in the SEA market to entice buying interest.”We sold two cargoes this week, but we have to lower our price as we are eager to offload these materials before the Lunar New Year,” a South Korean trader, who sold two parcels of DOP to SEA buyers this week, said. RATIONALE: CFR China dioctyl phthalate was assessed up $10/mt week on week at $1,050/mt Friday, based on a trade concluded at $1,050/mt CFR China. The CFR Southeast Asia marker was assessed down $15/mt week on week at $1,210/mt, reflecting two deals done in the range of $1,200-$1,215/mt CFR SEA. Phthalic anhydride was assessed unchanged week on week at $900/mt CFR China, as price discussions were heard at $900/mt CFR China. The SEA marker was up $10/mt on week at $965/mt CFR SEA, based on eight trades concluded at a range of$960-$980/mt CFR SEA. CFR China 2-EH marker was assessed unchanged on the week at $1,035/mt CFR China this week, as price discussion were heard at around $1,035/mt CFR China. The SEA marker was assessed unchanged week on week at $1,075/mt CFR SEA on muted trading. The China and SEA marker for normal butanol was assessed unchanged on week at $910/mt CFR China and$910/mt CFR SEA, respectively, due to a muted market.
Asian phenol/acetone prices were stable over the week leading up to Friday. While supply was increasing on the restart of plants in East China, turnarounds were also ongoing. Upstream, benzene was assessed up $13/mt on the week at $569/mt FOB Korea Friday, while propylene, another feedstock for phenol/acetone, was assessed unchanged over the same period at $925/mt FOB Korea Friday.
PHENOL: While spot supply for January and February cargoes was thin Friday, demand was also muted, sources said. Selling indications were heard at $1,050/mt CFR China, but a buyer said Friday that with domestic East China prices at Yuan 8,300-8,400/mt, approximately $970-$980/mt CFR China, buyers were unlikely to meet offer levels which they considered “high.” In the domestic market, however, sellers were optimistic about prices over the year. Phenol producers said that with the start up of multiple polycarbonate plants, demand for bisphenol-A was likely to firm, bringing with it demand for feedstock phenol. However, it was also possible that with growing supply of polycarbonate, prices would fall, resulting in narrowing spreads between polycarbonate and phenol. On the other hand, demand for phenol from other downstream segments such as cyclohexanone and caprolactam was thin, owing to narrow price spreads between feedstock and downstream products. CFR China phenol was assessed unchanged on the week at $1,025/mt, while CFR India phenol was assessed stable over the same period at $1,080/mt.
ACETONE: Losses on acetone production continued to be high, with domestic producers estimating around Yuan 300 lost with every metric ton of acetone produced. Acetone’s is typically used for producing methyl methacrylate, but demand from MMA producers have been weak, sources said. CFR China acetone was assessed unchanged week on week at $425/mt, while CFR India phenol was assessed stable over the same period at $465/mt.
Phenol prices went down Rs 3/kg to Rs 92-93/kg week on week at Kandla port on high inventory level and slow demand in the domestic market.
Booking level of phenol went down $30/mt to $1230-1240/mt week on week.
Prices expected more soften in coming days on bearish demand in major trading hubs of India.
International Market Updates:
CFR China phenol was assessed down $145/mt on the week at $1,175/mt Friday, above buy indications heard at below $1,000/mt, and at tradeable indications heard at $1,150-1,175/mt CFR China. End-users hailed the price drop as “overdue”, citing earlier price gains as having happened too quickly, and at too large a magnitude. Producers and end-users alike said Friday that prices of phenol is expected to continue falling moving forward, but market expectations differed on the impact of restocking activity for the Lunar New Year. A producer said Friday that CFR China prices would likely rebound closer to the festive season, while end-users said that prices would may stabilize below $1,000/mt CFR China. Despite the plunge in phenol, falls in feedstock benzene since October have left prices at a two-year low earlier this week. Market sources said that the price spread between benzene and phenol were still too high, and with benzene market long, it was likely that phenol prices would fall. Weakness in the downstream bisphenol-A has resulted in lower operating rates at BPA production plants, thereby affecting demand for phenol. Bisphenol-A is an intermediate material in the production of polycarbonate, which was heard at levels of $1,800-1,900/mt CFR China. “The price spread between polycarbonate and phenol is just $600-700/mt,” an end-user said Friday, adding that the narrow price spreads made it difficult for production plants to breakeven. CFR India phenol was assessed down $100/mt on the week at $1,240/mt, where a deal was heard concluded.
The Asian naphtha complex failed to receive much support Wednesday amid the excess surplus in the region, and subdued demand in the North. Apart from the tepid demand on paraffinic naphtha front, the requirement for heavy full range naphtha slowed substantially, contributing to the pullback on any support to the fundamentals, a market source said.
Competitive prices of regional condensates and light crude oil had drawn away splitter users’ earlier attraction to heavy full range naphtha. Such weakness was reflected in the paper market, as the September/October Mean Of Platts Japan naphtha swap time spread fell 25 cents/mt to plus $2/mt Monday.
The front-month time spread touched the same low on February 9. At 0300 GMT Wednesday, the spread was pegged at the same level at plus $2/mt. Looking West, arbitrage opportunities to send barrels to the East appeared grim as Asian naphtha cash differentials had weakened.
While the September-arrival naphtha arbitrage volume could not be discerned. Market sources said the combined volume in August and September would determine whether the Asian naphtha complex could reverse the oversupply situation.
“East [is trying] to shut the arb gate. Until East could digest the supply overhang, [bearish] sentiments will still prevail,” a naphtha trader said.
Separately, state-owned Indian Oil Corp. is offering 35,000 mt of naphtha, ex-Chennai, for loading over September 17-19, market sources said. The tender was heard to be expiring August 23, with next-day validity.
Privately-owned Reliance Industries was heard to have sold a 55,000 mt minimum 70% paraffin naphtha clip, to a Japanese buyer, for September 12-13 loading from Sikka, one market source said. The company declined to comment on details of the trade.
Meanwhile, Indonesia imported 171,877 mt of naphtha in June, down 29.75% month on month but up 1.71% year on year, detailed figures from Statistics Indonesia showed last week. For June, Indonesia has also turned its focus back to lower octane gasoline imports– primarily 88 RON grade — from the higher priced 92 RON and 95 RON gasoline grades.
Indonesia has capped monthly 88 RON gasoline imports at below 500,000 mt over last December to April this year but boosted imports in May to 596,878 mt. Indonesia imported 583,096 mt of low octane gasoline in June, while imports of gasoline with an octane number between 90 RON and 97 RON fell sharply from 688,735 mt in May to 581,160 mt.
“Due to the higher crude and gasoline prices, they are more focused on the 88 RON grade,” a market source with knowledge of Pertamina’s recent fuel purchase said.