The outage at Shell's 404,000 bpd Pernis refinery in the Netherlands has failed to strengthen the European naphtha market fundamentals, amid more visible supply levels and slower demand in the region, as per Platts. The Northwest European naphtha cash differential against the front-month swap closed down 50 cents/mt on the week at US$3.25/mt Friday as demand slowed and supply became more readily available.
The cash differential shot up from Monday's value of US$3.75/mt to US$7.75/mt Tuesday, representing a four-month high and reflecting fears that the fire at Pernis in Rotterdam would prompt participants to cover their short positions, according to sources. However, such concerns gradually dissipated as the week wore on and the market showed greater balance. "Pernis has not had that much of an impact as initially thought," one trader said. The net effect from the Pernis outage was balanced by the force majeure declared at the associated Moerdijk steam cracker for ethylene on Friday, according to sources. The declaration stems from a lack of supply of feedstocks -- naphtha and LPG -- to Moerdijk from the Pernis refinery.
Shell's Moerdijk steam cracker has a nameplate capacity of 900,000 m tpa of ethylene and 500,000 m tpa of propylene.Naphtha supply also looked tight in recent weeks, although spot offers had become more visible, according to sources. "Things looked expensive. [But now] some [open spec] is on offer," another source said. Offers have been heard in the Baltic, Mediterranean and Northwest Europe, according to sources. Demand has also slowed from petrochemicals end-users being well covered, according to sources.
"There is not much open spec trading right now. Petchems have forward bought to be covered...demand is slower," a second source said. The Northwest European naphtha market has strengthened in recent weeks due to firming demand. Demand for naphtha has been driven by petrochemical end-users.
"Crackers around Europe are focused on open spec," the second source said, as a result of a narrower propane-naphtha spread.