Kuwait Signs April 2015 To March 2016 Naphtha Deal At $8/T Premium

Kuwait Petroleum Corp (KPC) has sealed an April 2015 to March 2016 naphtha deal with at least one buyer at $8 a tonne above Middle East quotes on a free-on-board (FOB) basis, traders said on Thursday.

That marks the lowest term price for KPC since its December 2008 to November 2009 contract, and the lowest on record for its April to March contracts, Reuters data showed.

KPC has three one-year contracts with its buyers, mainly from Japan and South Korea. The three 12-month terms usually run from April to March, August to July and December to November.

Some traders said that current strong naphtha prices caused by delays in shipments from Europe and Algeria due to bad weather and a lack of U.S. cargoes coming to Asia was not expected to last through the second quarter.

“The strength is not going to last, especially once liquefied petroleum gas (LPG) becomes more readily available in second quarter,” said a trader.

LPG, a commodity used for heating, can also be an alternative to naphtha in crackers which produce petrochemical products such as ethylene and propylene, the building blocks of plastics.