European petrochemical companies are limiting purchases of naphtha feedstock for steam cracking ahead of the fourth quarter, as per Platts. The hesitant buying comes despite a recent rise in North Sea propane prices, a feedstock competing with naphtha in the steam cracking process. The European petrochemical industry typically absorbs around 4-5 mln mtpa of naphtha feedstock a month, a combination of term contracts and spot buying.
Although European naphtha has maintained a discount to propane since September 3, both products have maintained an upward momentum in price since late July, Platts data showed. A petrochemical source said to be economically viable as an alternative feedstock, propane needs to be at most 94% of the price of naphtha. North Sea propane prices have nearly doubled from around US$600/mt in late July to break above US$1000/mt by mid-September, Platts data showed, boosted by Asian demand and recent maintenance at the UK's Braefoot Bay terminal, a key European LPG export hub in the North Sea. North Sea propane was last assessed at US$1023.50/mt at Thursday's close, at a US$36.50/mt premium to naphtha.
On Friday, the October propane swap was heard pegged at US$30/mt above the equivalent naphtha swap. With propane now less economic for the steam cracking process, Dow Chemical has sold out two propane cargoes, amounting to around 40,000 mt in total, sources said.
17-Sep-12 
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