North Asian petrochemical makers opt to crack LPG as propane-naphtha spread dips to 4 month low

17-Feb-14

North Asian petrochemical producers have switched to using LPG as feedstock in their steam crackers amid a widening spread between LPG and naphtha prices, as per trade sources in Platts. At the Asian close Wednesday, the spread between the March Argus Far East Index propane swap to the Platts CFR Japan March naphtha swap stood at -US$62/mt -- a more than four-month low. On September 23, 2013, the spread stood at -US$69.75/mt. Naphtha is the mainstay petrochemical feedstock in Asia for steam crackers, but petrochemical producers switch to LPG, which typically comprises propane and butane, as an alternative if its price is around 90% to that of naphtha, or when LPG is more than US$50/mt cheaper than naphtha. Asian LPG prices were driven lower by weaker swaps, with LPG cargo prices sliding to a four-month low. The price of propane cargoes for delivery along the Singapore-Japan route 30-45 days forward, or for H1-March delivery, was assessed down US$31/mt from the previous session at US$875/mt, the lowest since October 10, 2013, when it hit US$872/mt. Meanwhile, CFR Japan naphtha cargoes for delivery over H1 March was seen at US$936.50/mt at the Asian close Wednesday.