AlwaysFreeRegister: Asia Naphtha Premiums Remain High Amid Refinery Turnarounds


Asia naphtha premiums remain high amid refinery turnaround in the Middle East. This is despite lower demand in Asia as petrochemical producers reduce operating rates at their crackers to combat low margins.

These operating cuts are estimated to lower naphtha demand in Asia by 300,000 to 350,000 tons this month. Cutting run rates at crackers have historically pushed spot naphtha prices to below the benchmark prices in Japan. Asian petrochemical makers also took the same step during the 2008 financial crisis.

However, premiums remain high due to several turnarounds in Middle Eastern refineries which lower their exports and offset some of the demand reduction from petrochemical makers which cut their cracker rates. As a result, Middle East naphtha expected to arrive in North Asia and Singapore next month is about 1.8 million tons so far, compared to 2.3 million tons scheduled to arrive in January.

SATORP is conducting planned maintenance on Train 2 at Jubail refinery from January 13 to February 29. ADNOC previously stated that it would perform routine maintenance at Ruwais facility in early 2020. Market sources also informed that refineries at Rabigh and Ras Tanura are also scheduled to undergo turnarounds in the first quarter.

A South Korean buyer last week, purchased benchmark open-specification grade at about $18.50/ton premium to Japan quotes on a C&F basis. This premium is lower than multi-year highs of $30/ton in October, but more than 18 times higher than a year-ago level.

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January 15, 2020 3:57 PM