Japan's Mitsubishi Chemical has concluded a contract with trading firms to buy three 25,000-mt naphtha cargoes for delivery over January-June 2017 in a rare move, amid a weak market, traders said Monday.
The contract was sealed at a discount of around $5.50/mt to the Mean of Platts Japan naphtha assessments, CFR Kashima, for open specification naphtha with a minimum paraffin content of 65%. One of the sellers was French major Total SA, sources said.
Some trade sources said Mitsubishi Chemical could have bought up to four parcels, but this could not be confirmed.
Platts assessed CFR Japan naphtha at a discount of $11/mt to MOPJ naphtha assessments and CFR South Korea naphtha at a discount of $13/mt on Friday.
The CFR Japan naphtha discount was assessed at $12/mt over August 17-18, the steepest since July 4, 2011, when it hit $13.50/mt, S&P Global Platts data showed.
Mitsubishi Chemical does not have a term contract for 2016, trade sources said.
Last year the company bought via occasional spot tenders but has not been seen buying many spot cargoes to date this year, traders said.
It last sought via a spot tender 50,000 mt of similar grade naphtha for first-half November delivery, though award details were not known.
Mitsubishi Chemical and Asahi Kasei Chemicals have a 50:50 joint venture firm, Asahi Kasei Mitsubishi Chemical Ethylene Corp,. which operates a naphtha-fed steam cracker at Mizushima.
The cracker, which can produce 495,000 mt/year of ethylene and 320,000 mt/year of propylene, was shut July 27 due to glitches in its cooling system and resumed operations August 15, the company said earlier.
Mitsubishi Chemical's naphtha-fed steam cracker in Kashima has been operating at maximum capacity since July 16, after completing routine maintenance, the company said earlier.
The Kashima cracker, which can produce 526,000 mt/year of ethylene and 260,000 mt/year of propylene, resumed operations July 14 after a two-week startup delay due to mechanical problems after a turnaround that began May 9.
Two other North Asian petrochemical makers -- Taiwan's Formosa Petrochemical Corp. and South Korea's Lotte Chemical Corp. -- have also recently sealed term contracts at steep discounts.
Formosa's contract for more than 1 million mt of open-spec naphtha with minimum 70% paraffin content for January-December 2017 was concluded at minus $8/mt to MOPJ naphtha assessments, Mailiao.
The discount was double that concluded for its January-December 2016 deal for around the same volume, trade sources said.
Lotte Chemical finalized its purchase contract for 300,000 mt of open spec naphtha with a minimum 70% paraffin content for December 2016-November 2017 at a discount of $7/mt to MOPJ naphtha assessments, CFR Yeosu and Daesan.
Trade sources said Thai company SCG Chemicals, a unit of Siam Cement Group, had also recently concluded a term contract. Details on volumes, price and sellers were not immediately known.
