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India's naphtha exports to decline on rising local demand

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* Naphtha exports to fall after first rise in 5 yrs in 2016* Supply crunch may last for at least two more months By Seng Li PengSINGAPORE | Friday, Feb 17 2017 IST
 
India's 2017 naphtha exports are expected to fall, after the volumes rose for the first time in five years in 2016, and this would prove untimely for buyers who are already hit by tighter supplies.Fewer European naphtha in Asia and a lack of alternative liquefied petroleum gas (LPG) feedstock were reasons that turned the weak naphtha around early this year.A fire mishap at Abu Dhabi's Ruwais refinery, and now India's supply reduction have deepened the supply dent, sending Asia's naphtha margins (price difference between naphtha and Brent crude) to a 13-month high of $115.18 a tonne on Feb. 14. < NAF-SIN-CRK >India's 2016 average monthly gross exports stood at 700,000 tonnes, official data showed, their highest since 2012. Their net exports (the difference between total exports and imports) were 460,000 tonnes."These are expected to fall to 370,000 tonnes-380,000 tonnes a month this year," said Premasish Das, Director for Asia and Middle East downstream oil markets at consulting firm IHS.Naphtha is required for India's growing petrochemicals and gasoline capacities.In January, Oil and Natural Gas Corp (ONGC) stopped exporting naphtha from Hazira in western India after diverting the fuel to a cracker operated by ONGC Petro additions Ltd (OPaL).In the past, ONGC has exported one or two 34,500-tonne naphtha cargoes a month from Hazira.Indian Oil Corp (IOC), which sold at least 460,000 tonnes of gasoline-grade naphtha in 2016, only makes sporadic offers from Paradip after a gasoline-making unit started up."Growing Indian naphtha demand affects Asia. OPaL, for instance, will buy naphtha from others and not just from ONGC," said a Singapore-based source, whose company purchases from India.Reliance Industries would also be importing heavy naphtha once its new paraxylene plant is fully commissioned, traders said.Asia's 2017 monthly net supply deficit is expected to rise to 4.2 million tonnes versus 4 million tonnes last year, said Das.The Middle East and Europe Mediterranean will fill the gaps but the tightness could persist for the next three months due to refinery maintenance and low-arrival levels of Western cargoes."Naphtha strength should last through April and even May," said a second Singapore-based source, who also buys Indian naphtha."The current tightness has more to do with unplanned outages and winter," said Das.On a global basis, naphtha market will be oversupplied until at least 2020, IHS Markit said in a press statement.REUTERS PY RAI1237

-- (Reuters) -- C-1-1-DL0298-1154020.Xml

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