Asia’s naphtha refining profit margin rebounded about 6% this week on hopes of demand from the region’s biggest importer South Korea after it scrapped import taxes.

The crack rose by $6.30 to minus $25.10 a ton over Brent crude on Friday and the backwardation price structure widened for a second day by 23 cents.

The second-half August naphtha price traded $2.25 per ton higher than the following month on Friday.

Analysts said the gains in naphtha cracks were temporary and could wither away as markets would head into the fourth-quarter bookings.

“We are expecting increasing naphtha supplies out of the Middle East as more volumes are exported out of the Al-Zour and Duqm refineries,” analysts at FGE wrote in a note.

That, along with the seasonal cooling-off of downstream petrochemical demand and the winter gasoline specification switch, could bring back weakness in the naphtha complex, they added.

At the deals window, 50,000 tons of first-half September loading naphtha changed hands. In gasoline markets, 250,000 barrels of the fuel were traded for a second consecutive session.

TENDERS

South Korea’s KPIC sought 25,000 tons of light naphtha for second-half August delivery at Onsan in a tender that closed on Thursday, market sources said. India’s BPCL and Kuwait’s KPC offered July naphtha.

NEWS

– Oil markets in Asia are bracing for further growth in exports from Kuwait’s newest Al-Zour refinery as the complex started up its third and final crude distillation unit this week, with trade sources saying the full impact was likely to be felt later in the third quarter as it ramps up operation.

– Russia’s energy exports to the Asia Pacific region now account for almost half of its total energy exports, exceeding a target to increase them to a third, TASS news agency reported on Friday, citing the country’s Accounting Chamber.
Source: Reuters (Reporting by Mohi Narayan; Editing by Shilpi Majumdar)