Next week's term talks in Singapore between KPC and South Korean and other Asian buyers follow this week's negotiations with Japanese buyers, which started on January 25.

``I don't think the Japanese will get it (the premium) down to the ideal price. Maybe closer to $4.00 per tonne, that's what everyone thinks,'' one South Korean said.

However, most Asian buyers said they thought the premium should be at least halved to $2.50 to $3.00 from the current level of $6.00 per tonne over Middle East quotes.

They indicated a $5.00 per tonne premium would be totally unacceptable.

``A $5.00 premium might be a walk-out number,'' another South Korean industry source said.

The talks centre on the March 1999 to February 2000 price of about three million tonnes of full-range naphtha used in the production of petrochemicals.

Naphthabuyers cite forecast decreasing Asian spot premiums and falling outright prices through the year as crude prices hit historical lows, as reasons why the premium should be dramatically reduced.

Asian chemical markets were currently depressed and industry sources forecast only a stabilisation and/or minor recovery towards the end of the year.

In past years, KPC's first round of negotiations with an assortment of large Japanese buyers tended to set the price tone for other Asian term customers.

In last year's round of negotiations, KPC said during negotiations with Japanese customers that it was willing to cut its premium from $13.50 per tonne to below $10.00.

Eventually both KPC and the Japanese buyers settled on the current premium, which was then set for the rest of the Asian customers.