SINGAPORE: Saudi Aramco skipped renewing a half-yearly contract on three out of five naphtha grades for the first time with its Asian buyers and will instead sell them in the spot market, industry sources with knowledge of the deals said yesterday.
Saudi Aramco usually offers five grades — A310, Jubail, Rabigh, A180 and Jeddah — on half-year term contracts. Some buyers have accepted the Rabigh and Jeddah grades lifting July to December 2013 at premiums of about $31 to $32 a tonne to its own price formula on a free-on-board (FOB) basis.
The premiums are steady to slightly lower to the term deals done for the two grades for the first half of the year.
Saudi Aramco had in December 2012 fetched record premiums for four of the five grades scheduled for first-half 2013 lifting.
It was not immediately clear why Saudi Aramco decided to pull the three grades A310, Jubail and A180 out of the term agreements for July to December.
“These grades that were not tied up through contracts will be in the spot market, which is currently seeing a considerable amount of cargoes due to European exports to Asia,” said a Singapore-based trader.
“Between September and December, there are very few traders who will be short of cargoes,” the trader said.
That should bring more pressure to bear on premiums for spot naphtha cargoes, which have already been cut in half for key supplier India from record highs hit in March due to strong demand amid heavy refinery maintenance. Premiums for July spot cargoes out of India have fallen to an average of $27 a tonne to Middle East quotes on an FOB basis, compared with an average of $55 a tonne in March.
Reuters
