Kuwait Ends Naphtha Deals with Japan Buyers

Kuwait has ceased its contracts for DecemberـNovember 2009 naphtha with all Japanese buyers after difficult negotiations, in a shocking move that left end users in Japan with no term supply from the Middle East producer for the first time for that oneـyear period. These customers ــ Mitsubishi Chemical Corp., Mitsui Chemicals Inc., Idemitsu Kosan Co. and Maruzen Petrochemical Co. ــ along with traders Marubeni and PetroـDiamond, held a total of at least 575,000 tons of fullـrange naphtha for the period.

Kuwait Petroleum Corp. (KPC) had already terminated their contracts with Marubeni and PetroـDiamond, owned by Mitsubishi Corp., over the past two weeks, traders said. "They told one of the trading houses that they have limited supplies and needed to terminate the contract," one trader said. KPC's move opens the way for other Middle East producers who are raising their naphtha output to supply to Japan via traders.

Japanese petrochemical makers had been holding out for better prices, alongside others including South Korea's Hanwha, YNCC, Samsung Total and India's Haldia Petrochemicals. Traders said the nonـJapanese buyers had accepted KPC's final offer of US$13 a ton premium to Middle East quotes, free on board (FOB) basis, after a series of cuts to its offer which opened a month ago at a US$19.00ـpremium. Taiwan's CPC Corp had even agreed to the offer at US$4 premium, after which KPC ــ Asia's secondـlargest supplier after Saudi Aramco ــ further reduced its premium in an unprecedented move, traders said. Japanese petrochemical makers continued to seek lower premiums, forcing KPC to end the protracted talks, traders said. - AlWatan