Asian premiums for heavy naphtha, also known as N+A naphtha due to its rich content of naphthenes and aromatics, have steepened in the wake of the recent Japanese disaster, trading sources said Wednesday.
A massive shortfall in gasoline supply has seen the country pulling in spot supplies of the product, traders said, which has had a knock-on effect on spot demand for heavy naphtha as well. Heavy naphtha is used as feedstock for producing reformate, a gasoline component used to boost octane.
A trade source said Wednesday that ExxonMobil had been heard in the market to have bought an MR-sized cargo (30,000-35,000 mt) of heavy naphtha from Chevron for April delivery into Shimotsu at a premium of "more than $50/mt" to the CFR Japan naphtha benchmark flat price assessment, or MOPJ, which is the pricing reference for cargoes traded in Asia.
This, however, could not be confirmed with either party Wednesday.
Shimotsu, located in southeast Japan, is the port for ExxonMobil subsidiary TonenGeneral Sekiyu, in which the US company owns a 50.02% stake.
"It's quite difficult to estimate what standard premiums are for heavy naphtha as compared to open spec naphtha, but the premium has definitely increased in the wake of quake," a Japanese trader said Wednesday.
"The last cargo we bought, which was also for April delivery, was done at less than [a premium of] $40/mt to MOPJ," the trader said, adding however that his cargo "probably" had a purchasing timing earlier than that of the potential ExxonMobil cargo, and hence a lower premium.
Platts reported earlier this week that Taiwan's CPC had canceled a spot buy tender for an MR-sized cargo of heavy naphtha. The petrochemical end-user had been seeking the parcel for May delivery into Kaohsiung, but did away with the tender citing adequate supplies stemming from internal refinery balances.
But sources also said that offers submitted into CPC's spot tender were at higher levels than for the company's last spot buy tender, which was for an identical cargo of naphtha for delivery into Kaohsiung over H2 March.
A trade source agreed saying that, due to the "high gasoline demand in Japan, heavy naphtha prices would be quite high now".
"It would be difficult to get a cheap offer--the Japanese will pay a good price for heavy naphtha cargoes," a trading source said Wednesday.
