In a sign sure to alarm butane producers, petchem buyers in Northwest Europe have gone cold on butane in favor of naphtha and propane. If these supplementary chemicals continue to be favoured by traders, at current price bands, it could force business leaders to re-examine business models. Butane suppliers will be hoping to contain this trend to this part of the world.
Northwest European butane prices remain too high to attract petrochemical buying despite their recent slide, sources said Thursday.
“At this stage we can’t afford these butane levels,” said a trader.
Delivered prices of butane coasters, which are usually 1,000-3,000 mt in size, came off from levels around parity with naphtha to around 96% of naphtha prices Thursday.
“The price was 100% last week,” said another source, adding that prices were coming under pressure because gasoline blenders were away from the market.
Recent demand for blending butane into gasoline gave boost to prices over the previous two weeks and turned petrochemical users away from the market.
“As a petchem user we haven’t bought for more than two weeks,” said a trader.
As sentiment turned at the start of the week and prices started coming off, petrochemical buyers were said to be reassessing their buying but for now were continuing to crack propane and naphtha.
“Propane is very weak and it is much better to carry on cracking propane than butane,” said a source.
Propane coaster prices were assessed around 81% of naphtha by Platts on Wednesday, feeling the pressure of steady flow of exports from the ConocoPhillips terminal at Tees, northeast England. “The situation in Tees is changing quite fast with huge increase in loading rate,” said a source.
The terminal was restarting after maintenance faster than expected, said a trader, adding that as a result there were abundant offers at low prices.
At those levels, petchem users remain more interested in propane than butane, a trader said, adding that demand may subsequently start pushing propane prices higher against naphtha.
By Elza Turner
Edited by Jonathan Dart
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