RTRS:Asia Naphtha/Gasoline-Naphtha cracks at 15-month low
SINGAPORE, Oct 24 (Reuters) - Asia's naphtha price was
around a two-week low on Monday but cracks hovered at a 15-month
low and timespreads fell to their lowest in about three months
as sentiment deteriorated further due to sluggish petrochemical
demand.
China's manufacturing sector picked up moderately in
October, snapping a three-month contraction and underscoring the
resilience of the world's second-largest economy and top energy
consumer, according to HSBC's China Flash Purchasing Managers'
Index.
While this fuelled investors' optimism in crude futures
trading, it failed to do the same for the naphtha market due to
fears of more units cutting runs because of oversupply of
petrochemicals, which are mainly from naphtha.
"Petrochemical prices are weak across barrels. Demand is
weak from polymers to aromatics," said a trader.
"Japanese petrochemical makers had to moderately cut runs
last month to combat the weak Chinese imports," he said, adding
that further reductions could be made in Japan.
South Korean petrochemical makers are usually the last in
Asia to cut runs as they have better economy of scale due to its
bigger capacity and more modern technology.
Now, they too are under some pressure to trim runs if the
petrochemical market fails to pick up, traders said.
The bearish mood has not stopped at least two buyers from
renewing a one-year contract with Kuwait Petroleum Corp (KPC)
for full-range naphtha lifting December 2011 to November 2012 at
premiums of $18.50 a tonne to Middle East quotes on a
free-on-board basis.
This was higher versus last year's term starting December
2010 at premiums of $12.00 a tonne.
South Korea's YNCC will buy January-December 2012 naphtha at
a discount of 50 cents a tonne to Japan spot quotes on a
cost-and-freight (C&F) basis, higher compared to 2011 volumes at
minus $4.50 a tonne.
"Trading houses cannot possibly sell at 2011 discount levels
to YNCC because of the costly Gulf barrels. The Middle East
sellers have remained bullish despite the weak economic climate
now," said a another trader.
Gasoline cracks were at a 2-1/2 month low as the supply
crunch was gradually easing as expected, with the peak demand
season having ended in Asia.
China's exports last month were up nearly 9.5 percent, or
27,000 tonnes to 323,790 tonnes versus less than 296,790 tonnes
in August. Its September export volumes were also the highest
since May.
* SWAPS OUTRIGHTS (CFR Japan): November and December swaps
slipped $2.50 and $1.50 a tonne respectively to $882.00 each.
* EAST-WEST SPREADS (The differential between CFR Japan
swaps and Northwest Europe swaps): Asia's November swaps were
$4.00 higher than Northwest European prices compared to $3.50
higher in the previous session.
* SWAPS CRACKS: Discounts on crack spreads for December
widened 61 cents to $12.06 a barrel to Brent crude.
* JAPAN OPEN-SPEC NAPHTHA NAF-1H-TYO: The price for
front-month first-half December eased $2.00 to $883.00 a tonne,
lowest since Oct. 11 at $874.75 a tonne.
* BACKWARDATION/CONTANGO: The intermonth spread
backwardation between first-half December and first-half January
narrowed to 50 cents, lowest since July 28 at the same level.
* CRACK SPREAD NAF-SIN-CRK: Cracks for first-half December
-- the profits or losses of refining Brent crude into naphtha --
fell $5.60 to $57.25 a tonne, lowest since July 20 2010 at
$52.60 a tonne.
* NAPHTHA TENDERS: HPCL has a tender due on Tuesday to sell
two 25,000-30,000 tonnes cargoes from Vizag. The lifting dates
for each cargo is Nov. 11-13 and Nov. 21-23.
- BPCL sold 35,000 tonnes of naphtha to Shell for Nov. 12-14
lifting from Mumbai at premiums of $11-$12 a tonne to Middle
East quotes on a free-on-board (FOB) basis,.
- BPCL also sold to Vitol an 11,000-tonne cargo for Nov.
1-10 loading from Haldia at a narrower discount of $23 a tonne
to the same price formula versus minus $30 for an October cargo
and minus $63 for a July parcel.
* NAPHTHA CASH DEALS: Glencore sold a second-half December
cargo to Shell at $883.00 a tonne.
* REFORMING MARGINS: Gasoline's premium to naphtha
GL92-SIN-DIF climbed 22 cents to $24.21 a barrel.
* GASOLINE CRACKS GL92-SIN-CRK: Cracks -- premiums/losses
obtained from refining Brent crude into gasoline -- fell 48
cents to $9.90 a barrel, lowest since Aug. 11 at $9.34 a barrel.
* GASOLINE CASH TRADES: One deal, with Shell having bought a
97-octane cargo from BP for Nov. 8-12 loading at $125.60 a
barrel.
