Australia's Dec NWS condensate seen lower on persistent weak margins

Australian North West Shelf condensate cargoes loading in December have been valued lower month on month, as end-users cut runs amid weak petrochemical margins, sources said.

For the December-loading trade cycle, three 650,000-barrel cargoes of Australia's North West Shelf condensate were scheduled, up by one from the previous month, according to market sources.

Shell holds the first cargo to load over Dec. 2-6, Woodside Energy has the second cargo for Dec. 16-20 loading and Chevron holds the final cargo for Dec. 30-Jan. 3 loading.

Despite most of the overhung November-loading condensate barrels clearing in the spot market, market participants remained bearish for December-loading condensate barrels amid narrow downstream margins, valuing NWS at a discount in the $5s-$7s/b to Platts Dated Brent crude assessments, FOB.

In comparison, November-loading barrels of the condensate last traded at a discount in the $6s/b over the same benchmark.

"Margins are bad -- the point is if buyers need to run [their operations] or not, and they are buying just enough to run," an Asia-based trader said, adding that end-users are turning to naphtha instead as it is cheaper to purchase directly than to split condensate.

Meanwhile, regular supply is anticipated for fresh December-loading cargoes, with minimal disruptions expected for the supply of Gorgon and Wheatstone grades, despite workers starting strikes at Chevron's two LNG facilities in Australia Oct. 10, according to market sources.

Adding to the bleak outlook, Indonesia's Pertamina has not purchased any condensate barrels for December loading, having instead opted to seek naphtha barrels, according to market sources.

Relatively stable demand for heavy full-range naphtha

Demand for heavy full-range naphtha was heard stable despite lower splitter runs, market sources said.

"Splitter runs are likely to come under pressure amid reduced demand and lower margins from petrochemical, gasoline and middle distillates sectors," S&P Global Commodity Insights analysts said in a report.

In the most recent spot tender concluded for heavy full-range naphtha, South Korea's Hanwha TotalEnergies bought at least 25,000 metric tons of grade C heavy full-range naphtha for H2 November delivery at a premium in the high single digits/t to Mean of Platts Japan naphtha assessments, CFR, pricing over H2 October prior to delivery.

Some recovery in the aromatics margin past weeks may have prompted higher award levels, market sources said.

Platts assessed the spread between Platts CFR Taiwan/China paraxylene and C+F Japan naphtha physical at $198.795/t at the Oct. 11 Asian close, Commodity Insights data showed. The spread was at its lowest at $168.67/t Sept. 18, and has been on a uptrend since, albeit still hovering below the typical breakeven level of $280-$300/t.

Previously, Hanwha TotalEnergies bought one 25,000-metric ton cargo of grade C heavy full-range naphtha for H1 November delivery to Daesan at a premium of $3.50/t to MOPJ naphtha assessments, CFR, with pricing over H1 October prior to delivery.

Kuwait's KPC sold 75,000 metric tons of full range naphtha, at a premium of $19-$20/t to Mean of Platts Arab Gulf naphtha assessments, FOB, with pricing five days after the bill of lading, for Oct. 3-5 loading, Commodity Insights reported earlier.

Meanwhile, Indonesia's Pertamina issued a tender seeking 44,000 metric tons of naphtha as a splitter feedstock for Nov. 10-12 delivery to TPPI Tuban. The tender closed Oct. 9, with validity until Oct. 11.

This is likely a reissue of PT Kilang Pertamina's previous two tenders that sought the same volume of naphtha over the same delivery dates for TPPI Tuban. The first tender closed Sept. 24, with validity until Sept. 27, while the second tender closed Oct. 3, with validity until Oct. 7, Commodity Insights reported earlier. Award details could not be ascertained.