About 55,000T Saudi naphtha West-bound this week
Traders not convinced Oct shipment will surpass July's vols.
October 14, 2010 2:28 by Reuters
About 55,000 tonnes of naphtha are sailing to the West this week from Saudi Arabia, after some 350,000 tonnes were shipped to Europe in July to ease an Asian glut, traders said on Thursday.
The parcel was lifted on Oct. 13 from Saudi Arabia onboard tanker ‘Analypsi Lady’ by Vitol, traders said.
“This could be its second cargo this week,” said a trader.
The two cargoes are likely from Rabigh and Yanbu, and the moves could be due to high supplies in the region, traders said.
Europe is affected by a port strike in France which has also brought the country’s oil refining industry to a near paralysis.
“The strength in Europe as a region seems artificial because not all traders were able to find buyers for Eastern barrels,” said a trader.
“The French strike is definitely boosting sentiment, but that is driven by a panic reaction rather than short supplies. But if you can find a cheap vessel, maybe it is possible to to move cargoes to the West, especially if it is from Rabigh,” he added.
Moves from the Middle East or Asia to Europe are considered rare because this region is net short of the petrochemical feedstock naphtha.
Traders surprised the market in July with the unusual East-West arbitrage because there was hardly any sales outlets in Asia then.
Formosa shut a cracker in early July following a fire, around the time when the Middle East emerged with rare spot offers after some long-term buyers scrapped their contracts, citing high premiums.
Cracks sank to their lowest level this year on July 19 at $50.60 a tonne premium, but have since recovered and shot to their highest in five months on Oct. 12 at $141.50 a tonne.
Some traders are even expecting fewer Gulf spot cargoes due to maintenance of splitters in the United Arab Emirates starting around this week.
Kuwait Petroleum Corp (KPC) has tied up some 1.1 million tonnes of naphtha for a 12-month period starting December, which could see them scaling back spot sales from year-end.
“Unless you cannot find any buyers in Asia, I doubt you will see a lot of Gulf cargoes going West because the benefits of doing that are marginal,” said another trader.
Most South Korean crackers are still cranking out at full-tilt, and sooner or later, Formosa will bring its fire-hit cracker back up in the next one-two months, traders said.
(Editing by Ramthan Hussain)