Asia Naphtha/Gasoline-Cracks Fall Despite Demand

Asia's naphtha price was around its lowest in two weeks on Tuesday, with cracks falling to a three-session low despite demand from Taiwan and a cracker in Japan resuming operations after the earthquake.

Taiwan's Formosa bought an estimated 150,000 tons of naphtha for first-half May arrival at lower premiums of $3.50-$4.50 a ton to Japan spot quotes on a cost-and-freight (C&F) basis compared to similar volumes bought for second-half April.

The purchase came as a spokesman for Formosa said that a minor fire didn't hurt operations at Asia's top naphtha buyer's 2.93 million tons per year cracking complex.

"Sellers are saying that the market would be firm in May but in reality, some of them could be feeling unsure now because of the situation in Japan," said a North Asian trader.

 JX Nippon Oil & Energy has restarted its 404,000 tpy cracker in Kawasaki, but crackers owned by Mitsubishi Chemical at Kashima, which have a total capacity of 828,000 tpy, are expected to stay shut for at least two months.

That would cause a naphtha demand loss of more than 200,000 tons a month, which more than offset the supply lost from India's Oil & Natural Gas Corp (ONGC).

The state-owned refiner may skip April naphtha exports from Hazira port for the third month in a row due to a delay in start up of a mooring facility.

Gasoline cracks were nearly at a week low despite forecast of a stronger market in the U.S. Analysts polled by Reuters expect gasoline stocks in the U.S. to fall 1.6 million barrels in the week to March 25.

In Pakistan, state-owned PSO paid nearly plus $57.00-69.50 a ton to Middle East naphtha quotes for 125,000 tons of 87-octane gasoline for April-June arrival to Gunvor and Litasco.

These were higher versus about $55.00-$59.00 a ton premiums it paid for cargoes arrival in February and March, due possibly to higher freight charges.

Taiwan's CPC is looking to sell a May cargo in a tender, which closes on March 31.