<article><p class="lead">The Asian naphtha market has been trending downwards after peaking in October but is showing some signs of recovery as margins rose to a month-high yesterday.</p><p>Naphtha margins, or the <i>Argus</i> cfr Japan price against Ice Brent fell from $85-90/t in mid-October to $41.364/t on 25 November, a six-month low before rebounding to $63.669/t on 8 December.</p><p>The light naphtha market has been plagued by unexpected cracker shutdowns, high volumes of arbitrage arrivals and supply pressure on lower paraffinic naphtha cargoes as some heavy full-range naphtha cargoes enter the paraffinic naphtha supply. </p><p>But the return of South Korean petrochemical producer Lotte Chemical's 1.1mn t/yr naphtha cracker has supported margins. Naphtha margins exceeded $60/t for the first time since early November after Lotte yesterday achieved on-specification ethylene and propylene production at its long-idled cracker in Daesan, two days earlier than planned. </p><p>Naphtha demand has been under pressure following unplanned shutdowns at fellow South Korean producer <a href="https://direct.argusmedia.com/newsandanalysis/article/2156925">LG Chemical's 1.16mn t/yr naphtha-fed cracker</a> on 5 November and at Japanese refiner and petrochemical producer <a href="https://direct.argusmedia.com/newsandanalysis/article/2161838">Eneos' Kawasaki-based 540,000 t/yr naphtha cracker</a> in early December. </p><p>Cfr northeast Asian light naphtha differentials are showing signs of a pick-up with KPIC and Hanwha Total paying premiums of $5-6/t for January delivery cargoes with paraffin content above 77pc. Hanwha Total at the end of November paid parity to Japanese spot assessments for light naphtha cargoes for January delivery. </p><p>Heavy full-range naphtha differentials are also showing an uptick. Taiwan's private-sector refiner Formosa Petrochemical bought heavy full-range naphtha cargoes at a $4/t discount to Japanese spot assessments for 29-31 January delivery as compared to a $17/t discount to the same assessments for similar grade of cargo delivering during 10-20 January. </p><p class="bylines">By Aldric Chew</p></article>
