Abu Dhabi National Oil Co has reached a final price agreement with its term customers to supply both splitter and low sulfur naphtha over the 12 months starting April 2012 at a premium of $23.50/mt to the ADNOC formula, trading sources said Friday.
The ADNOC formula takes the average of FOB Arab Gulf naphtha assessments from Platts and Petroleum Argus.
The acceptance follows ADNOC's downward revision of offers earlier this week, which saw the supplier reducing its offers for both splitter and low sulfur naphtha to a premium of $23.50/mt, down from a premium of $25/mt while its paraffinic naphtha is now priced at a premium of $25.50/mt, down from a premium of $27/mt. All grades are priced to the ADNOC formula.
Even with the downward revision however, not all term buyers for the splitter and low sulfur naphtha grades renewed their contracts with ADNOC for this cycle. In addition, no buyer acceptance has yet been heard for ADNOC's offer for paraffinic naphtha.
"There's still too much uncertainty in the downstream petrochemical market, especially for polymers," a market participant had said Thursday.
"Besides, ADNOC has another term cycle coming up and hopefully things will be clearer then... there's no urgency [to commit] now," the source said.
Besides the April-March cycle, ADNOC also offers term naphtha via its July-June and January-December cycles.
For its April 2011-March 2012 term, ADNOC had settled with its term customers a premium of $17.50/mt for splitter naphtha, a premium of $18.50/mt for the low sulfur grade, and a premium of $20/mt for paraffinic naphtha. All grades were priced to the ADNOC formula. On a year-on-year comparison basis, the current April 2012-March 2013 term naphtha prices represent a hike of 27.3-34.3% in premiums.
