Asia naphtha sees price uptrend as Formosa buying re-emerges |
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(ICIS) -- Asia’s
naphtha prices are likely to stage an uptrend until late January, supported by
strong spot buying from dominant importer Taiwan and trading companies which
helped to mop up voluminous deep-sea inflows for next month, traders said on
Friday.
The naphtha inter-month spread widened USD1/tonne
(EUR0.77/tonne) to USD7.50/tonne in backwardation, while the prompt naphtha
crack spread strengthened to near USD100/tonne against Brent crude futures.
"The market is heading for a hike and this will be the case until the
Lunar New Year," said a trader. The Lunar New Year takes place on 23-24
January 2012. "The trading companies have rushed to buy lots of spot cargoes for
January. The huge arbitrage volume for January has already been absorbed into
the market," the trader added.
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Asia is expected to receive half a million tonnes of arbitrage European
naphtha next month, and the fact that the cargoes were placed swiftly reflected
strong regional demand, traders said. Taiwan’s Formosa Petrochemical
Corporation (FPCC) bought on Thursday 150,000 tonnes of spot naphtha for
second-half January delivery, its first spot purchases since August and after
lifting run rates at its three crackers to 85-86% from 80-85%
previously.
The cargoes were transacted at a premium of
USD3.00-3.50/tonne to Japan quotes CFR (cost and freight). FPCC ceased spot
naphtha imports from August to mid-December because of cracker shutdown
issues.
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Demand from FPCC is expected to remain strong in the first half of next
year, because the company has scheduled to shut its 700,000 tonne/year No 1
cracker at Mailiao for a 40-45 day turnaround in August
2012.
Meanwhile, the South Korean crackers paid higher naphtha
premiums this week for spot transactions for second half of January delivery,
traders said.
mrcplast.com
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