South Korea's Lotte Daesan Petrochemical has dropped its 2009 contract with Saudi Aramco for 150,000 tons of naphtha, and replaced the lost volume by buying from other sellers, traders said on Wednesday. “Aramco's offer was actually not that bad this round, but Lotte was able to get even better offers from others,” said one of the traders. Lotte Daesan, set to merge with Honam Petrochemical Corp [on Jan. 1, did not renew the contract to buy the A180 grade at $5.00 a ton premium to Aramco's price formula, on a free-on-board basis for 2009 lifting. Instead, it bought a total 500,000 tonnes of open-spec and full-range naphtha for March-December 2009 arrival at a discount of $4.00-$7.00 a tonne to Japan quotes on a cost-and-freight (C&F), up from its original target of 400,000 tons. The majority of term lifters of Saudi naphtha, however, went ahead with the renewal of the contracts. These included Asia's largest ethylene maker Formosa Petrochemical Corp, Taiwan's CPC Corp, Titan Chemicals Corp, trading houses Marubeni Corp, Itochu, Hanwha Corp and Daelim Corp. Lotte Daesan owns a 1 million tons per year (tpy) naphtha cracker, which is operating at full stride, while Honam operates a 750,000 tpy cracker that is currently running at around 90 percent of capacity. Following the merger, which will be called Honam Petrochemical, the company will become the country's second-largest ethylene operator, tailing behind Yeochun NCC which has three crackers with a total nameplate capacity of 1.8 million tpy.
