European naphtha prices have come under pressure from run cuts in the polyolefin chain as well as falling crude prices, with ICE Brent futures sinking to an eight-month low Friday, sources said in Platts. CIF NWE naphtha was assessed at US$846.50/mt Friday, up slightly from Thursday's seven-month low of US$845/mt. ICE Brent May was at US$104.72/b Friday.
"We are seeing record low cracks for this time of year," said a trading source.
"Demand for petrochemical products is not that great currently in Europe due to the economic slowdown," a naphtha trader said. "BASF is going to shut a big cracker facility in Antwerp next month and it is already having an impact; that is why they sold a 12,500 mt naphtha cargo in the Platts window." BASF will shut its 1.08 mln tpa Antwerp steam cracker in Belgium, the biggest in Europe from the H2-April until H2-June, the source said.
The ongoing weakness in the derivative polyethylene market is a reflection of the sustained length in ethylene inventories for most European producers. "We are pushing back our ethylene consumption. The market is getting longer and longer as we speak," an ethylene buyer said. Cracker operators said they were reducing cracker operating rates to around 76-80% to cope with overflowing inventories. To further reflect the weakness in the ethylene market, Platts data showed that Europe's premium over CFR Northeast Asia prices fell to a 2013 low this week. Friday, CFR Northeast Asia was assessed at US$1300/mt. The average spread so far in 2013 is US$136/mt. In 2012, it stood at $US114/mt.