Australia's Oct-loading NWS condensates market valuations seen stable to lower

Market valuations for Australian North West Shelf condensates cargoes loading in October was seen stable-to-lower, as the complex grapples with thin downstream margins coupled with more attractive naphtha prices, trade sources said.

For the October-loading trading cycle, two 650,000-barrel cargoes of NWS condensates have been scheduled, stable on the month, market sources said.

Oil major BP holds the first cargo for loading over Oct. 10-14, while Australia's Woodside Energy holds the second cargo for loading over Oct. 24-28.

Valuations for October-loading NWS were heard at a discount ranging $7s/b to $8/b to Platts Dated Brent crude assessments, FOB.

The Platts second-month naphtha swaps crack against Dubai crude swaps averaged minus $5.82/b as of Aug. 8 Asian close, compared to an average of minus $9.65/b in July, S&P Global Commodity Insights data showed.

In the previous trading cycle, the last trade of the grade was the second and final 650,000-barrel cargo held by Chevron for loading over Sept. 28-Oct. 2 sold via a tender issued by Pertamina, at a discount in the high-$4s/b to Platts Dated Brent crude assessments, CFR Tuban.

"TPPI bought up 1 of the NWS [in the previous cycle], so it seems that the refineries are pushing up the market instead of end-users," a trader said.

Participants have emphasized that the recent improvement in naphtha cracks was not reflective of the market, attributing the strength in cracks to the decline in crude prices.

The CFR Japan naphtha physical crack spread against front-month ICE Brent crude futures widened $16.28/mt, or 23.66%, on the month to $85.05/mt at the Aug. 8 Asian close, Commodity Insights data showed.

"[Market] might get some swing players support for October, but overall demand situation doesn't look like it will get stronger," a trader said, adding that "few splitters was heard to have reduced runs [in] late July."

Trades sources continue to eye fresh pricing cues from Indonesian Pertamina's monthly condensate tender for October delivery, which closed Aug. 6, with validity until Aug. 8, along with QatarEnergy's monthly condensate tender for October loading which closes Aug. 14, with next-day validity.

"Two Qatari cargoes is the minimum and the market can easily stomach 3-4 spot [condensate] cargoes. If nothing [in particular] happens [in the market], we should see a fairly stable market," a trader said.

QatarEnergy previously sold two 500,000-barrel cargoes of low sulfur condensate for September loading to a trader and a South Korean buyer at discounts in the high $1s/b to $2s/b to the Platts front-month Dubai crude assessments on FOB basis, Commodity Insights reported previously.

Naphtha complex pressured

The Asian naphtha market was subdued on thin trading activity despite a slight uptick in olefin margins, sources said.

Reflecting unviable olefin margins, the key CFR Northeast Asia ethylene-CFR Japan naphtha physical spread -- closely watched by petrochemical producers -- widened $55.38/mt, or 38.83%, on the month to $198/mt at the Aug. 8 Asian close, Commodity Insights data showed.

The spread continued to remain below the typical breakeven level of $250/mt for integrated producers and $300-$350/mt for non-integrated producers.

Conversely, "naphtha prices seems to be better than condensate prices" industry source said.

In the latest spot activity for heavy full-range naphtha, South Kore's GS Caltex was heard seeking 25,000 mt of naphtha for H2 September delivery via a tender closing Aug. 7, with same-day validity.

Meanwhile, Indonesia's Pertamina issued a tender previously seeking at least 22,000 mt of naphtha as a splitter feedstock for Sept. 14-16 delivery to TPPI Tuban. The tender closed July 24, with validity until July 29.

"The tender was awarded", a company source said without revealing the awarded level.

This is also likely a reissue of PT Kilang Pertamina's previous tender that sought the same volume of naphtha over the same delivery dates for TPPI Tuban, Commodity Insights reported earlier.