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