Australia’s May-loading NWS condensate may see support from shorter supply

Cash differentials of Australia's North West Shelf condensate for the May-loading trade cycle are expected to be supported by shorter supply, although the upside may be capped due to lower demand amid key buyers' absence, sources said.

The May-loading trade cycle saw one 650,000-barrel cargo of NWS condensate scheduled, down one month over month, with China's CNOOC holding the sole cargo for May 6-10 loading.

Valuations for the grade were heard ranging from discounts in the $1s/b to $5s/b against Platts Dated Brent crude assessments, FOB.

The shorter loading program comes as Australia's Karratha Gas Plant -- an integral onshore element of the NWS Project -- is set to have three LNG trains undergo maintenance from early May to early June.

One train will be under maintenance over May 9-16, a second over May 19-28 and the last over May 31-June 9.

"There will be [a shortage] of cargoes for the second half of the month," a trader said, alluding to CNOOC's cargo being an early May loader.

In the previous cycle, Indonesia's Pertamina, a key NWS condensate buyer, was heard to have purchased one cargo held by Chevron for April 4-8 loading, at a discount of around $3/b to Platts April Dated Brent crude assessments, FOB, equivalent to above parity to Platts Dated Brent on a CFR Tuban basis, according to market sources.

However, the complex's upside could be capped amid sluggish downstream petrochemical demand, compounded by the absence of key buyers like TPPI for the May trading cycle.

Additionally, supply could increase, with BP heard having sold its NWS cargo for April 20-24 loading in the week of March 3 to a trader, at a small discount against Dated Brent, FOB, market sources said, although price levels could not be confirmed.

A source said the trader might resell the cargo instead of placing it into their system, adding, "If [the] buyer is trying to trade it, it means there are two NWS in May, which is no big change...."

Trade sources also noted South Korean demand could be hindered amid competitive US sweet crude barrels and sourcing alternatives such as light crudes.

Platts, part of S&P Global Commodity Insights, assessed the second-month naphtha swaps crack against Dubai crude swaps averaged minus $4.92/b month to date, compared with February's average of minus $4.69/b.

The market is also watching QatarEnergy's offering of low sulfur condensate for May loading via its monthly spot tender, which closes March 12 with next-day validity.

QatarEnergy previously sold one 500,000-barrel cargo of low sulfur condensate for April loading to ENOC, at a premium of around low $1s/b to Platts front-month Dubai crude assessments, FOB, according to trade sources.

The company also sold two 500,000-barrel cargo of deodorized field condensate for April loading, each to ATC and ENOC, at a premium of around $1.25/b to $1.60/b against the same benchmark.

Asian naphtha market firm

The Asian naphtha market stayed firm as physical cargoes remained awarded at high premiums, although a trader said "demand seems to ease a bit as people have covered the prompt short".

Previously, China's demand increased as five of Sinopec's refineries were scheduled for maintenance in March, set to last more than a month, with fewer arbitrage cargoes arriving in the East.

Platts assessed the CFR Japan naphtha physical crack against front-month ICE Brent crude futures at $99.68/mt at the March 10 Asian close, up $5.73/mt day over day and $1.90/mt week over week, amid falling crude oil prices following tariffs between US, Canada, Mexico and China, and OPEC+'s decision to unwind production cuts.

On the olefins front, the spread between CFR Northeast Asia ethylene and CFR Japan naphtha physical averaged $257.88/mt month to date, compared with February's average of $219.46/mt, slightly above the typical breakeven spread of $250/mt for integrated producers.

However, end-users said the recent spread widening was due to naphtha prices dropping rather than the ethylene market improving.

Aromatics production margins remain under pressure from tariff threats and thin gasoline blending demand in the US.

The spread between CFR Taiwan/China paraxylene marker and CFR Japan naphtha physical, a key metric for PX producers, averaged $210.43/mt month to date, compared with February's average of $212.75/mt, below the typical breakeven levels of around $280-$300/mt.

South Korea's Hanwha TotalEnergies was heard to have bought two 25,000-mt cargoes of grade A heavy full-range naphtha for H2 April delivery to Daesan, at a premium of around $22/mt to Mean of Platts Japan naphtha assessments, CFR, with pricing over H2 March prior to delivery.

Previously, the company bought around six grade C heavy full-range cargoes for H1 April delivery, at a premium in the $10.50s/mt to MOPJ naphtha assessments, CFR, pricing over H1 March prior to delivery.

Meanwhile, "the integrated splitter margins are projected to lower temporarily in March as condensate feedstock prices remain firm", a Commodity Insights analyst said in a report.