Petrochemicals in NWE continue to shun propane as feedstock

Platts has reported that Northwest European petrochemical companies have abandoned propane for naphtha as a feedstock.  Prices weigh heavily in this consideration, as naphtha producers are now in a purple patch in the region.

Petrochemical companies in Northwest Europe are continuing to shun propane as a feedstock, according to industry sources.

Propane can be used as an alternative feedstock to naphtha by a number of petchem companies, but the delivered price of propane usually has to be below the delivered price of naphtha.

In the first half of November CIF propane prices were below CIF naphtha and propane was being widely used as a petchems feedstock.

But in the second half of November and first decade of December CIF propane prices moved above naphtha, driven by tight supply and demand to cover trader short positions.

This resulted in propane becoming too expensive to crack and according to sources most petchems either stopped or considerably reduced their usage of propane.

With weak demand from the traditional heating market in Northwest Europe, CIF propane prices have weakened recently, reaching a last published value Tuesday of $12.25/mt below CIF naphtha, based on Platts data.

But industry sources said the propane/naphtha price spread would probably have to widen even further before petchems started to crack significant quantities of propane again.

Austria-based petrochemicals company Borealis was actually a seller of propane Tuesday, concluding a deal for a 20,600 mt CIF cargo with Totsa at $950/mt and flat to balance December quotes, which based on Platts data equated to a price level just below parity with naphtha.

By Derek Hardy and Jonathan Fox of Platts

The full article is visible via the link below – Pankaj Oswal


Article: Petrochemicals buying enlivens North Sea butane market

Respected commodity benchmarking and information provider Platts has reported that North Sea butane stocks have been increasingly sought in the last few weeks from Northwestern European buyers.  In only the last week the market has picked up noticeably and could indicate increasing demand for butane, which serves as an alternative to naphtha.

Buying interest from the petrochemicals sector in Northwest Europe has enlivened the North Sea butane market over the last week, according to industry sources.

Over the summer period, North Sea mixed butane is used by the gasoline-related sector in Northwest Europe in the production of alkylate and MTBE. However, mixed and normal butane can also be used by the petchems sector as an alternative feedstock to naphtha, providing the CIF butane price is at a discount to the CIF naphtha price.

Over the second half of June, activity on the North Sea butane market was extremely thin, with hardly any buying or selling interest seen for spot product.

More recently, however, the market has been a bit busier. At the beginning of this week, Statoil was a seller of 8,000-12,000 mt of either mixed or normal butane at sellers option CIF NWE July 8-12 and offered down to $765/mt when a deal was concluded with Borealis for delivery to their steam cracker at Stenungsund in Sweden.

Although trade sources said demand from the gasoline-related sector is still thin over the balance of July, there has been more demand seen from petchems. Sources added that another North Sea butane cargo was recently concluded into the petchems sector at a delivered price of about 92% of CIF naphtha.

Written by Derek Hardy

Edited by James Leech – Platts

The full article is visible via the link below – By Pankaj Oswal