Australia’s Nov NWS condensate seen weaker amid higher supply, weak margins

Market valuations for Australian North West Shelf condensate cargoes loading in November was seen lower on the month, with greater supply and weak petrochemical margins, sources said.

For the November-loading trade cycle, two 650,000-barrel cargoes of NWS condensates have been scheduled, steady on the month, market sources said.

Japan’s Mitsubishi holds the first cargo to load over Nov. 4-8, while China’s CNOOC holds the second cargo for loading over Nov. 18-22.

Traders had expected November-loading NWS to trade lower on the month, valuing the Australian condensate at discounts in the $3s/b to $7s/b to Platts Dated Brent crude assessments, FOB. In comparison, trades for October-loading cargoes were valued at Dated Brent minus around $3s/b.

The softer valuations were attributed to prior month cargoes trading higher amid market uncertainty around Libyan condensate supply, which saw ENOC opt for Qatar’s Low Sulfur condensate to replace Mellitah condensate from the 70,000 b/d El-Feel field.

Regular supply was expected for November-loading condensate, according to a trade source, with one cargo each of Australia’s Prelude and Pluto cargoes available thus far.

Additionally, QatarEnergy issued a spot tender offering an unspecified volume of deodorized field condensate in 500,000-barrel parcels for November loading, through a tender closing Sept. 17 with next-day validity.

DFC has not been offered in the spot market since June, for the August-loading trade cycle at a discount of around $2.05/b to Platts front-month Dubai crude assessments, FOB, S&P Global Commodity Insights previously reported.

The issuance of DFC spot cargoes may indicate a higher supply available for Qatari condensates. The demand outlook also looked weak, with splitters based in China, Indonesia and South Korea considering further operating rate cuts from 80% due to poor aromatics margins, sources said.

“End-users may not be able to afford [expensive condensates] given that the PX-naphtha [spread] dropped; it was $300/t not long ago, and olefins margins are still very low,” an Asia-based trader said.

Asia naphtha weighed by sluggish PX margins

Aromatics production margins have been on a downtrend, with the Asian paraxylene-naphtha spread falling below $200/t on Asian close Sept. 10.

The Platts-assessed spread between CFR Taiwan/China paraxylene and CFR Japan naphtha physical narrowed to $286.82/t in August from $321.39/t in July, Commodity Insights data showed.

The spread was observed to have declined to $188.50/t on Asian close Sept 10. It was last lower at $186.625/t on March 8, 2022.

The PX market has weakened sharply following a steep fall in crude oil prices and sluggish Chinese demand for purified terephthalic acid and polyester.

Splitter run rates may decline further, as the typical breakeven level was heard at $280-$300/t.

“Price support for PX-naphtha may face downside risk owing to ample supply and slow downstream demand recovery,” an analyst from Commodities Insights said.

In the latest spot activity for heavy full-range naphtha, South Korea’s Hanwha TotalEnergies Petrochemical bought C-grade heavy full-range naphtha for second-half October delivery at a premium of $9/t to Mean of Platts Japan naphtha assessments, CFR, pricing over H2 September prior to delivery.

The company previously bought one 25,000-metric ton cargo of grade C heavy full-range naphtha for delivery in H1 October to Daesan at a premium of around $12/t to MOPJ naphtha assessments, CFR, with pricing over H1 September prior to delivery.

Meanwhile, Indonesia’s Pertamina issued a tender seeking at least 22,000 metric tons of naphtha as a splitter feedstock for Oct. 14-16 delivery to TPPI Tuban. The tender closed Sept. 4, with validity until Sept. 9, but award details could not be ascertained.
Source: Platts