LACK OF NAPHTHA SALES FROM SAUDIS DOESN'T WORRY JAPANESE COMPANIES

LACK OF NAPHTHA SALES FROM SAUDIS DOESN'T WORRY JAPANESE COMPANIES

Japanese traders and end-users are unconcerned about news that Saudi Arabia has not sold any heavy or full-range naphtha to Japanese buyers under term contracts in 1992, said trading, refinery and petrochemical company sources here.

Saudi Arabian Marketing and Refining Co. has sold a total of about 300,000 metric tons of full-range naphtha from Jeddah under one-year contracts this year to two European traders.Samarec has agreed to sell the naphtha on a price formula, based on northwest European spot market assessments, the sources said. This means the buyers are barred from shipping these cargoes to Asia.

One Japanese trading house is still negotiating with Samarec about a possible 1992 term contract for Jeddah naphtha, regional trading sources said.

Japanese traders did not desperately want to buy this grade of naphtha from the Red Sea, as they had difficulties last year finding buyers in Japan, due to increased domestic supplies of heavy naphtha, the sources said.

In Japan, the Ministry of International Trade and Industry allowed oil companies to increase their crude processing in order to cut expensive oil product imports.

Thus domestic naphtha supplies rose about 20 percent to 30 percent this year from a year before. Both full-range and heavy naphtha are used for the production of aromatics - benzene, toluene and xylene - in Japan. These petrochemicals are used in the production of synthetic fibers and packaging materials.

In addition, the ministry is expected to completely deregulate crude processing some time in the next fiscal year (April to March).

Therefore, the sources said Japanese end-users are likely to continue having increased supplies of naphtha for aromatics production.

They also added they will buy cargoes from the international spot market if necessary.

Samarec sold Japanese buyers a total of 450,000 tons of full- range naphtha

from Jeddah and 570,000 tons from Rabigh under term contracts last year.

Samarec did not sell full-range naphtha from Rabigh this year, as it is shipping the product to the Ras Tanura refinery and using it to increase gasoline production, the sources said.

Samarec will have about 150,000 tons of Rabigh naphtha for salein the spot market next year. Also, if it does not sign any further term contracts for Jeddah naphtha, it will have about 200,000 tons for spot sales from that refinery for sale next year.