Market and product
European petrochemicals limit naphtha buying ahead of Q4
European petrochemical companies are limiting purchases of naphthafeedstock for steam cracking ahead of the fourth quarter, a naphtha tradingsource said Friday.
The hesitant buying comes despite a recent rise in North Sea propaneprices, a feedstock competing with naphtha in the steam cracking process.
"You have to bear in mind that September is a quarter end," the tradingsource said. "The petrochemical companies don't want to be holding stock at ahigh price so they're going to keep their spot naphtha buying to a minimum."
Although European naphtha has maintained a discount to propane sinceSeptember 3, both products have maintained an upward momentum in price sincelate July, Platts data showed. A petrochemical source said to be economicallyviable as an alternative feedstock, propane needs to be at most 94% of theprice of naphtha.
North Sea propane prices have nearly doubled from around $600/mt in lateJuly to break above $1000/mt by mid-September, Platts data showed, boosted byAsian demand and recent maintenance at the UK's Braefoot Bay terminal, a keyEuropean LPG export hub in the North Sea, LPG traders said.
North Sea propane was last assessed at $1023.50/mt at Thursday's close,at a $36.50/mt premium to naphtha.
Friday, the October propane swap was heard pegged at $30/mt above theequivalent naphtha swap, traders said.
With propane now less economic for the steam cracking process, DowChemical has sold out two propane cargoes, amounting to around 40,000 mt intotal, sources said.
The first was for September 25-30 delivery and the second was doneearlier this week, but delivery dates were unknown, traders said. Buyers werealso unconfirmed.
Dow Chemical was not available for comment.
"Some are selling LPG and replacing it with naphtha," a petrochemicalsource said.
The European petrochemical industry typically absorbs around 4 million-5million mt of naphtha feedstock a month, a combination of term contracts andspot buying, sources say.
However, the trading source added that petrochemical spot naphtha buyinghas had been low so far in September.
"Spot petrochemical demand has been very poor during September, in factwe've hardly seen any buying interest over the past two weeks."
The hesitant buying comes despite a recent rise in North Sea propaneprices, a feedstock competing with naphtha in the steam cracking process.
"You have to bear in mind that September is a quarter end," the tradingsource said. "The petrochemical companies don't want to be holding stock at ahigh price so they're going to keep their spot naphtha buying to a minimum."
Although European naphtha has maintained a discount to propane sinceSeptember 3, both products have maintained an upward momentum in price sincelate July, Platts data showed. A petrochemical source said to be economicallyviable as an alternative feedstock, propane needs to be at most 94% of theprice of naphtha.
North Sea propane prices have nearly doubled from around $600/mt in lateJuly to break above $1000/mt by mid-September, Platts data showed, boosted byAsian demand and recent maintenance at the UK's Braefoot Bay terminal, a keyEuropean LPG export hub in the North Sea, LPG traders said.
North Sea propane was last assessed at $1023.50/mt at Thursday's close,at a $36.50/mt premium to naphtha.
Friday, the October propane swap was heard pegged at $30/mt above theequivalent naphtha swap, traders said.
With propane now less economic for the steam cracking process, DowChemical has sold out two propane cargoes, amounting to around 40,000 mt intotal, sources said.
The first was for September 25-30 delivery and the second was doneearlier this week, but delivery dates were unknown, traders said. Buyers werealso unconfirmed.
Dow Chemical was not available for comment.
"Some are selling LPG and replacing it with naphtha," a petrochemicalsource said.
The European petrochemical industry typically absorbs around 4 million-5million mt of naphtha feedstock a month, a combination of term contracts andspot buying, sources say.
However, the trading source added that petrochemical spot naphtha buyinghas had been low so far in September.
"Spot petrochemical demand has been very poor during September, in factwe've hardly seen any buying interest over the past two weeks."
Source:http://www.platts.com
