Boom for European refiners producing naphtha first time in over four years

25-Mar-15

Refiners in Europe are likely to flourish with production of naphtha for the first time in over four years due to exports to Asia and demand for gasoline blending in Europe, as per Bloomberg. Naphtha crack, which shows the amount of money that can be made when refining the product from Brent crude, flipped to a profit of 7 cents a barrel Tuesday from a loss of 75 cents on Monday, according to data from PVM Oil Associates. It was last profitable in Europe to make naphtha, which is used in the manufacture of petrochemicals, in January 2011. According to trading sources in Platts, sentiment in the Northwest Europe naphtha market was boosted by tight supply in the prompt, strong petrochemical end-users demand, decent blending demand and arbitrage opportunities. According to a Europe-based industry source, the NWE naphtha market was mainly supported by demand from petrochemical end-users who were running at very high rates, by demand from gasoline blenders and by the arbitrages to Brazil and to Asia. According to another market participant, demand for naphtha is reasonably good, whatever has been offered has been bought quickly and there was not much on offer at the moment. As per Bloomberg, refineries in Europe have struggled to be profitable in recent years, with about 15 plants having closed since 2008, according to the International Energy Agency. Naphtha is typically unprofitable for refiners, who rely on products such as diesel and jet fuel to make money. Refining margins in Europe are at their highest in three years and set to rise further as 4.6 mln bpd of global refining capacity goes offline for maintenance until June