Iran condensate exports expected to fall to 5-month low in July
June 23 (Reuters) - Iran's condensate exports in July are expected to fall to their lowest level in five months as major buyer South Korea scales back purchases of the ultra-light oil, trade sources said on Thursday.
Robust demand for condensate, from South Korea in particular, helped drive a recovery of Iranian oil exports to a 4-1/2-year high in June, although the volume is expected to dip in July.
Loadings of Iranian condensate in June rose to about 408 Mbpd, the highest volume since sanctions on Iranian oil exports were lifted in January.
For July, Iranian condensate exports are expected to fall by 38% to about 252 Mbpd as Asian refiners replace the ultra-light oil with cheaper naphtha.
The volume destined for South Korea in July is expected to fall by nearly two-thirds to 84 Mbpd from a record high in the previous month, as key buyer SK Energy switched to process cheaper naphtha, sources said.
SK Energy declined to comment.
Condensate is processed at splitters to produce mainly naphtha, a petrochemical feedstock.
Benchmark Singapore naphtha refinery margins from refining a barrel of Brent crude have already tumbled more than 60% since the beginning of the year to around $53 per ton on June 22.
Still, the start-up of new and existing splitters in Asia and the Middle East is expected to drive demand for Iranian condensate later in third quarter.
"There could be a rebound (in condensate prices) in September because naphtha cracks are showing some signs of a rebound," a trader with a North Asian firm said.
South Korea's Hyundai Chemical will also need to buy more condensate from September onwards for its new splitter, which could come into operation in October, he said.
The petrochemical joint venture between Hyundai Oilbank Co and Lotte Chemical has already purchased Qatari condensate and is in talks with the National Iranian Oil Company for long-term supplies.
A planned restart of Singapore's Jurong Aromatics complex and the commissioning of Qatar's new splitter could tighten Qatari condensate supplies and drive demand for Iranian oil, traders said.
Reporting by Florence Tan in SINGAPORE, Osamu Tsukimori in TOKYO, and Jane Chung in SEOUL; Editing by Ed Davies
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