The benchmark CFR Japan naphtha price hit a 19-month high on Monday at $528.625/mt, amid growing demand from the petrochemical sector on the back of stronger margins, S&P Global Platts data showed.
The marker was last higher at $543.375/mt on July 6, 2015.
Over the last two weeks, a slew of spot buy tenders emerged in the Asian naphtha market for second-half March delivery cargoes.
Japanese trader Idemitsu, Taiwan's Formosa Petrochemical, South Korea's Hanwha Total and LG Chem, and China's Unipec, had issued the tenders, mainly seeking light-grade naphtha.
Formosa last Thursday bought 150,000 mt of open-spec naphtha, with a minimum paraffin content of 70%, for H2 March delivery into Mailiao, despite planned maintenance at its residue fluid catalytic cracker from March to April.
The company has scheduled a turnaround at one of its two RFCCs, each with the capacity to produce 350,000 mt/year of propylene, from March 10 to April 17 while its olefins conversion unit will be taken offline from March 10 to April 26, Platts previously reported.
Hanwha Total secured an open-spec naphtha cargo Monday for the same laycan for delivery into Daesan.
LPG, the alternative feedstock to naphtha, has gained strength recently due to limited supplies, market sources said. This has resulted in naphtha being the preferred feedstock for petrochemical production
ATTRACTIVE CRACKING MARGINS
The CFR Northeast Asia ethylene-CFR Japan naphtha spread widened to the highest level in nearly five months at $778/mt last Friday, before dipping to $771.375/mt Monday.
Asia's ethylene market has been gaining strength since the middle of January, driven by strong spot demand -- especially from China.
A few heavy full-range naphtha cargoes, which are typically used for gasoline blending, were also diverted to the petrochemical pool due to better premiums, sources said.
"Heavy full-range naphtha was partly [diverted] to the petrochemical [sector], as it is oversupplied. Open-spec naphtha has more value than heavy full-range naphtha [these days]," a South Korea-based naphtha trader said.
