Northwest European naphtha prices have hit fresh multi-year lows under continuing pressure from lack of spot demand, a weakening Asian market, and a darkening outlook as storage options become more limited, trading sources have been reported in Platts.
CIF Northwest European naphtha cargoes fell US$21.50/mt at the start of the week to be assessed at US$613.75/mt, the lowest since July 16, 2010, when it was US$613/mt.
Meanwhile, the CIF NWE naphtha cargo's physical discount to the front-month swap widened to US$19.50/mt, its widest discount since December 5, 2008.
"In Europe, bears control the market and, with refining margins strong, nothing is stopping the slide," a naphtha trader said. "LPG keeps replacing naphtha in the cracking pool," a petrochemical end-user said, adding the European naphtha market has not reached a floor yet as there was no improvement in sight.
The main outlet for spot naphtha at the moment in Northwest Europe were storage tanks, with 500,000-720,000 mt of naphtha said to be in tanks, mostly in ARA, but also in the Baltics and the UK. "The only [spot] buying is to put in tanks," a broker said. "I guess it is slowly getting worse because there is more supply than demand for naphtha everywhere."
Another naphtha industry source said: "With gasoil cracks up and gasoline unseasonably strong, refining margins encourage refiners to run, which will lead to further naphtha production."