Singapore (Platts)--18Feb2011/154 am EST/654 GMT
Naphtha buyers participating in term talks with the Abu Dhabi National Oil Company and Kuwait Petroleum Corporation are locked in a standoff over what they deem to be high premiums offered by the two Middle Eastern producers for the supply of naphtha over the April 2011-March 2012 cycle, trading sources said Friday. No buyer acceptances have been heard yet from either camp. Last weekend, ADNOC had offered splitter, low sulfur and paraffinic naphtha at premiums of $19/mt, $20/mt and $21/mt, respectively, all priced basis the ADNOC formula, which is an average of FOB Arab Gulf naphtha assessments from Platts and Petroleum Argus. But its term customers submitted counter-offer prices of a maximum of what was settled over the January-December 2011 cycle. For that term, ADNOC had sold splitter and paraffinic naphtha at a premium of $16.50-$18.50/mt to ADNOC's formula. Meanwhile KPC term customers said Friday morning that the supplier has lowered its offer price for full range naphtha a second time, to a premium of $20/mt to the Mean of Platts Arab Gulf naphtha assessments. KPC's initially offered a premium of $22/mt to MOPAG naphtha assessments, which was rejected by buyers. It subsequently lowered its offer to a premium of $21/mt in a nod to the widespread disappointment expressed by market participants, but buyers said the reduction of only $1/mt was not enough, given that the premium for KPC's full range naphtha is usually around $2/mt lower than that of the Abu Dhabi National Oil Co.'s offer price for splitter naphtha. This equates to a premium of $17/mt for KPC's full range naphtha. Still, trade sources said buyer acceptances for ADNOC and KPC could be heard by the close Friday. "ADNOC and KPC prices could match up quite closely for all we know. There isn't much time left so some parties might just shake hands on it," a market participant said Friday.--Clarice Chiam, clarice_chiam@platts.comSimilar stories appear in Oilgram News. See more information at http://bit.ly/OilgramNews